Publicly traded special purpose acquisition company Mosaic Acquisition Corp. said it agreed to merge a subsidiary with Blackstone Group Inc.'s smart home technology company Vivint Inc. to form Vivint Smart Home Inc.
The new company is expected to have an agreed initial enterprise value of $5.6 billion and an initial market capitalization of approximately $3.1 billion.
Boards of both the parties unanimously approved the merger, which remains subject to the approval of Mosaic and Vivint stockholders, among other conditions.
According to the terms of the agreement, Blackstone and other investors in Vivint, including its management, will retain their existing investment. Vivint will also receive additional investment, from Blackstone, which will purchase $100 million of Mosaic's common stock immediately before the closing of the merger, along with affiliates of SoftBank Group Corp.'s Fortress Investment Group LLC, which will invest an additional $125 million.
Vivint will also receive another $150 million from other investors, who, along with the current stockholders of Mosaic, will hold the remaining outstanding shares of Vivint. That amount includes $25 million from Fortress as well.
Upon the close of the merger, expected during the fourth quarter of 2019 or the first quarter of 2020, Blackstone and other existing investors of Vivint are expected to own around 78% of Vivint's outstanding shares. An estimated $690 million of net cash proceeds are expected at the closing, conditional upon a number of factors.
Net proceeds from the transactions, including Mosaic's cash on hand, are expected to be used for working capital and general corporate purposes and to reduce a portion of existing Vivint debt.
Vivint provides smart home products along with professional installation, nationwide in-home service and professional monitoring and customer care to clients across the U.S. and Canada. Vivint founder and CEO Todd Pedersen, President Alex Dunn and CFO Mark Davies will continue to lead the company. Mosaic Executive Chairman and CEO David Maura will join existing Vivint directors on the board of the new company, along with a director from Softbank Vision Fund who will join after the deal has closed.
J.P. Morgan Securities LLC, Evercore and Blackstone Capital Markets are the financial advisers and capital markets advisers to Vivint. Deutsche Bank Securities, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and RBC Capital Markets LLC are acting as financial advisers and capital markets advisers to Mosaic.
Simpson Thacher & Bartlett LLP serves as legal counsel to Vivint. Paul Weiss Rifkind Wharton & Garrison LLP is the legal counsel to Mosaic. Fried Frank Harris Shriver & Jacobson LLP is acting as legal counsel to Fortress.
