Vivint Smart Home to Merge With Mosaic Acquisition Corp.
The merged company is anticipated to have an initial enterprise value of approximately $5.6 billion and an initial market capitalization of about $3.1 billion.
PROVO, Utah — Vivint Smart Home has entered into a definitive merger agreement with Mosaic Acquisition Corp. (NYSE: MOSC), a publicly traded special purpose acquisition company based in New York City.
Under terms of the transaction, Vivint will merge with a subsidiary of Mosaic. Following the merger, Mosaic will be renamed Vivint Smart Home Inc., with an agreed initial enterprise value of $5.6 billion. According to an announcement, Vivint is anticipated to have revenues of $1.3 billion for fiscal year 2020E and adjusted EBITDA of $530 million, implying an adjusted EBITDA multiple of approximately 10.5x.
Vivint, one of the world’s largest smart home companies, is said to have 1.5 million subscribers across 98% of the zip codes in the United States and in Canada. Blackstone Group (NYSE: BX) completed a purchase of Vivint for more than $2 billion in 2012.
“We are excited to partner with Mosaic to unlock the next chapter of the Vivint growth story. We remain committed to our mission of redefining the home experience through intelligently designed, Cloud-enabled solutions delivered to every home by people who care,” Todd Pedersen, founder and CEO of Vivint, states. “Just as it was in 1999 when I founded this business, to today where we are a multibillion-dollar enterprise, our customers remain our focus. As the smart home market rapidly expands globally, Vivint is in the early stage of a massive opportunity and is ready to create the future of how we live and interact with our homes.”
Following the closing of the merger, the company will continue to be led by its current management team, including Pedersen, President Alex Dunn and CFO Mark Davies. All existing Vivint directors will serve on the board of directors of the combined company, joined by David Maura from Mosaic and, after the closing and subject to regulatory approval, by a director from the SoftBank Vision Fund.
Maura founded Mosaic in 2017. In the announcement, he credits Pederson and Dunn for building the company into “an incredible business” over the past two decades.
“The strong subscriber momentum, compelling unit economics, and multiple levers for organic growth represent a phenomenal opportunity to be at the cutting edge with technology that is changing the way we live,” Maura says. “With most companies only deploying a standalone device strategy, Vivint differentiates itself as a fully integrated platform focused on unifying the customer experience in an efficient, seamless and simple way. I would like to congratulate Vivint and am pleased to confirm the Mosaic Board of Directors’ unanimous support for this transaction.”
The announcement includes the following transaction details:
- Investment funds affiliated with the Blackstone Group and other existing investors of Vivint, including management, are retaining their full existing investment.
- Blackstone has agreed to invest an additional $100 million in Vivint through an investment in the common stock of Mosaic immediately prior to the closing of the merger.
- Affiliates of Fortress Investment Group, a subsidiary of SoftBank Group Corp., have agreed to invest an additional $125 million in Vivint through an investment in the common stock of Mosaic immediately prior to the closing of the merger. This investment is in addition to the existing investments in Mosaic held by Fortress affiliates.
- The remaining outstanding shares of Vivint will be held by the current stockholders of Mosaic and certain other investors who are investing $150 million in connection with the merger pursuant to forward purchase commitments obtained in connection with Mosaic’s IPO, which includes $25 million from Fortress. Additionally, David Maura is committing to purchase $5 million under a 10b5-1 trading plan.
- Pro forma net leverage reduced from 5.5x to 4.3x LTM 6/30/2019 Covenant Adjusted EBITDA, with substantially all net proceeds expected to be used to repay debt.
Blackstone and other existing investors of Vivint are expected to own approximately 78% of the outstanding shares of Vivint immediately following the merger. In total, there will be approximately $690 million of net cash proceeds at closing, assuming no redemptions by Mosaic’s public stockholders, including the $150 million of forward purchase commitments obtained in connection with Mosaic’s IPO. The net cash proceeds from these transactions, including Mosaic’s cash on hand, are expected to be used for working capital and general corporate purposes, including to pay down a portion of existing Vivint debt.
The transaction is expected to be completed during the fourth quarter of 2019 or the first quarter of 2020, subject to approval by Mosaic and Vivint stockholders and other customary closing conditions.
The boards of directors of both Vivint and Mosaic have unanimously approved the proposed transaction. Mosaic will apply to list the shares of its common stock being issued in connection with the merger on the New York Stock Exchange.
SSI continues to report this story.
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