- Blackstone to Invest $100 Million in Cash, at a Price of
$10.00 per Share
- Affiliates of Fortress Investment Group LLC (Subsidiary of
SoftBank Group Corp.) to Invest Additional $125 Million in Cash at
a Price of $10.00 per Share
- Existing Investors in Vivint to Remain 100% Invested,
Rolling Over $2.3 Billion in Equity
- Representative of the SoftBank Vision Fund to Join Board of
Directors After the Closing1 Alongside Blackstone, Mosaic, and
Vivint Management
- Vivint Intends to Use Proceeds from the Transaction to
Immediately Pay Down Debt and Position the Company to Further
Capitalize on Growth Initiatives
- Projected Near-Term Organic Adjusted EBITDA Growth of
37%2
Vivint Smart Home, Inc. (“Vivint”), a leading smart home
technology company that is redefining the home experience through
intelligently designed cloud-enabled solutions, and Mosaic
Acquisition Corp. (NYSE: MOSC) (“Mosaic”), a publicly traded
special purpose acquisition company, announced they have entered
into a definitive agreement to merge Vivint 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, 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 is one of the largest smart home companies in the world,
delivering integrated smart home products and cloud-enabled
services to 1.5 million subscribers across 98 percent of the zip
codes in the U.S., and in Canada. Vivint offers a comprehensive
suite of smart home products along with professional installation,
nationwide in-home service, and 24/7 professional monitoring and
customer care.
Todd Pedersen, Founder and CEO of Vivint, commented, “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.
Just as it was in 1999 when I founded this business, to today where
we are a multi-billion-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.”
“Vivint has defined the smart home – becoming the industry
leader on the back of its innovative products, integrated
solutions, and superior customer experience,” stated Peter Wallace,
a Senior Managing Director at Blackstone. “We are proud to have
supported the development of the company that has set the pace for
the industry and are excited by the opportunity to invest further
to support Vivint’s future growth.”
Alex Dunn, President of Vivint, added, “We look forward to
leveraging David Maura’s prior M&A and operational experience
leading a consumer-facing company, along with Fortress’
well-established capital markets expertise as we work towards
Vivint’s continued success. Proceeds from this transaction will
fortify our balance sheet, and enable us to continue to drive the
innovation, customer focus, and service offerings that our
customers have come to expect from us. We intend to remain
disciplined in our capital allocation, while driving down customer
acquisition costs without sacrificing organic growth.”
Following the closing of the merger, Vivint will continue to be
led by its experienced management team, including founder and Chief
Executive Officer Todd Pedersen, President Alex Dunn and Chief
Financial Officer 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.
David Maura, Executive Chairman and Chief Executive Officer of
Mosaic Acquisition Corp., commented, “Having founded Mosaic in
October 2017, I was determined to find not only the right target,
but also the right partners. Todd and Alex have built an incredible
business over the past 20 years, and I am honored to be a part of
the team as we look into the future. 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. 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.”
Drew McKnight, Managing Partner of Fortress Investment Group
LLC, commented, “We have followed Vivint for a long time and have
deep respect for the company and its leadership team. We believe
Vivint is extraordinarily well positioned as a leading IoT and
connected-device business at an inflection point in the evolution
of an industry. We are extremely excited about this investment and
the opportunity to partner with Blackstone and the Vivint
management team as the company builds on its position of recognized
leadership and innovation shaping the connected world of
tomorrow.”
Summary of Transaction
On September 15, 2019, Vivint entered into a definitive merger
agreement with Mosaic. The merged company is anticipated to have an
initial enterprise value of approximately $5.6 billion and an
initial market capitalization of approximately $3.1 billion3.
References to Vivint following the completion of the merger are to
Mosaic after its change in name to “Vivint Smart Home, Inc.”
In connection with this transaction:
- Investment funds affiliated with The Blackstone Group Inc.
(“Blackstone”) 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 LLC (“Fortress”), 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 percent 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.
Vivint and Mosaic intend to host a joint conference call
providing further details on the transaction on September 16,
2019.
Conference Call Details
Date:
September 16, 2019
Time:
10:00 a.m. ET
Dial-in:
1-833-235-7641 (U.S. and Canada)
1-647-689-4162 (International)
Conference ID:
2044499
Webcast:
www.investors.vivint.com/events-presentations/events
A replay of the webcast will be made available for 30 days on
the investor relations page of Vivint’s website at
www.investors.vivint.com.
Advisors
J.P. Morgan Securities LLC,
Evercore and Blackstone Capital Markets are acting as financial
advisors and capital markets advisors to Vivint. Deutsche Bank
Securities, Goldman Sachs & Co. LLC, Morgan Stanley & Co.
LLC and RBC Capital Markets LLC are acting as financial advisors
and capital markets advisors to Mosaic.
Simpson Thacher & Bartlett LLP is acting as legal counsel to
Vivint. Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting
as legal counsel to Mosaic. Fried, Frank, Harris, Shriver &
Jacobson LLP is acting as legal counsel to Fortress.
About Mosaic
Mosaic Acquisition Corp. is a special purpose acquisition
company formed by Mosaic Sponsor, LLC and Fortress Mosaic Sponsor
LLC for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business
combination with one or more businesses. For more information,
visit www.mosaicac.com.
About Vivint Smart Home
Vivint is a leading smart home
company in North America. Vivint delivers an integrated smart home
system with in-home consultation, professional installation and
support delivered by its Smart Home Pros, as well as 24/7 customer
care and monitoring. Dedicated to redefining the home experience
with intelligent products and services, Vivint serves 1.5 million
customers throughout the United States and Canada. For more
information, visit www.vivint.com.
Important Additional Information and Where to Find It
This communication is being made in respect of the proposed
merger transaction involving Mosaic and Vivint. Mosaic intends to
file a registration statement on Form S-4 with the Securities and
Exchange Commission (the “SEC”), which will include a proxy
statement of Mosaic, a consent solicitation statement of Vivint and
a prospectus of Mosaic, and each party will file other documents
with the SEC regarding the proposed transaction. A definitive proxy
statement/consent solicitation statement/prospectus will also be
sent to the stockholders of Mosaic and Vivint, seeking any required
stockholder approval. Before making any voting or investment
decision, investors and security holders of Mosaic and Vivint are
urged to carefully read the entire registration statement and proxy
statement/consent solicitation statement/prospectus, when they
become available, and any other relevant documents filed with the
SEC, as well as any amendments or supplements to these documents,
because they will contain important information about the proposed
transaction. The documents filed by Mosaic with the SEC may be
obtained free of charge at the SEC’s website at www.sec.gov. In
addition, the documents filed by Mosaic may be obtained free of
charge from Mosaic at www.mosaicac.com. Alternatively, these
documents, when available, can be obtained free of charge from
Mosaic upon written request to Mosaic Acquisition Corp., 375 Park
Avenue, New York, New York 10152, Attn: Secretary, or by calling
212-763-0153.
Mosaic, Vivint and certain of their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of Mosaic, in favor
of the approval of the merger. Information regarding Mosaic’s
directors and executive officers is contained in Mosaic’s Annual
Report on Form 10-K for the year ended December 31, 2018 and its
Quarterly Report on Form 10-Q for the quarterly periods ended March
31, 2019, and June 30, 2019, which are filed with the SEC.
Information regarding Vivint’s directors and executive officers
(who serve in equivalent roles at APX Group Holdings, Inc., a
subsidiary of Vivint) is contained in the APX Group Holdings, Inc.
Annual Report on Form 10-K/A for the year ended December 31, 2018
and its Quarterly Report on Form 10-Q for the quarterly periods
ended March 31, 2019, and June 30, 2019, which are filed with the
SEC. Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the transaction may be obtained by reading the registration
statement and the proxy statement/consent solicitation
statement/prospectus and other relevant documents filed with the
SEC when they become available. Free copies of these documents may
be obtained as described in the preceding paragraph.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of any securities
in any state or jurisdiction in which such offer, solicitation, or
sale would be unlawful prior to registration or qualification under
the securities laws of such other jurisdiction.
Forward-Looking Statements
This communication contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
including, but not limited to, Mosaic’s and Vivint’s expectations
or predictions of future financial or business performance or
conditions. Forward-looking statements are inherently subject to
risks, uncertainties and assumptions. Generally, statements that
are not historical facts, including statements concerning our
possible or assumed future actions, business strategies, events or
results of operations, are forward-looking statements. These
statements may be preceded by, followed by or include the words
“believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,”
“will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or
“intends” or similar expressions. Such forward-looking statements
involve risks and uncertainties that may cause actual events,
results or performance to differ materially from those indicated by
such statements. Certain of these risks are identified and
discussed in Mosaic’s Form 10-K for the year ended December 31,
2018 under Risk Factors in Part I, Item 1A. These risk factors will
be important to consider in determining future results and should
be reviewed in their entirety. These forward-looking statements are
expressed in good faith, and Mosaic and Vivint believe there is a
reasonable basis for them. However, there can be no assurance that
the events, results or trends identified in these forward-looking
statements will occur or be achieved. Forward-looking statements
speak only as of the date they are made, and neither Mosaic nor
Vivint is under any obligation, and expressly disclaim any
obligation, to update, alter or otherwise revise any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by law. Readers
should carefully review the statements set forth in the reports,
which Mosaic has filed or will file from time to time with the
SEC.
In addition to factors previously disclosed in Mosaic’s reports
filed with the SEC and those identified elsewhere in this
communication, the following factors, among others, could cause
actual results to differ materially from forward-looking statements
or historical performance: ability to meet the closing conditions
to the merger, including approval by stockholders of Mosaic and
Vivint on the expected terms and schedule and the risk that
regulatory approvals required for the merger are not obtained or
are obtained subject to conditions that are not anticipated; delay
in closing the merger; failure to realize the benefits expected
from the proposed transaction; the effects of pending and future
legislation; risks related to disruption of management time from
ongoing business operations due to the proposed transaction;
business disruption following the transaction; risks related to
Mosaic’s or Vivint’s indebtedness; other consequences associated
with mergers, acquisitions and divestitures and legislative and
regulatory actions and reforms; risks of the smart home and
security industry, including risks of and publicity surrounding the
sales, subscriber origination and retention process; the highly
competitive nature of the smart home and security industry and
product introductions and promotional activity by competitors;
litigation, complaints, product liability claims and/or adverse
publicity; cost increases or shortages in smart home and security
technology products or components; the introduction of unsuccessful
new smart home services; privacy and data protection laws, privacy
or data breaches, or the loss of data; the impact of the Vivint
Flex Pay plan to Vivint’s business, results of operations,
financial condition, regulatory compliance and customer experience;
and Vivint’s ability to successfully compete in retail sales
channels.
Any financial projections in this communication are
forward-looking statements that are based on assumptions that are
inherently subject to significant uncertainties and contingencies,
many of which are beyond Mosaic’s and Vivint’s control. While all
projections are necessarily speculative, Mosaic and Vivint believe
that the preparation of prospective financial information involves
increasingly higher levels of uncertainty the further out the
projection extends from the date of preparation. The assumptions
and estimates underlying the projected results are inherently
uncertain and are subject to a wide variety of significant
business, economic and competitive risks and uncertainties that
could cause actual results to differ materially from those
contained in the projections. The inclusion of projections in this
communication should not be regarded as an indication that Mosaic
and Vivint, or their representatives, considered or consider the
projections to be a reliable prediction of future events.
Annualized, pro forma, projected and estimated numbers are used
for illustrative purpose only, are not forecasts and may not
reflect actual results.
This communication is not intended to be all-inclusive or to
contain all the information that a person may desire in considering
an investment in Mosaic and is not intended to form the basis of an
investment decision in Mosaic. All subsequent written and oral
forward-looking statements concerning Mosaic and Vivint, the
proposed transaction or other matters and attributable to Mosaic
and Vivint or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements above.
Non-GAAP Financial Measures
This press release includes
Adjusted EBITDA, which is a supplemental measure that is not
required by, or presented in accordance with, accounting principles
generally accepted in the United States (“GAAP”).
“Adjusted EBITDA” is defined
as net income (loss) before interest expense (net of interest
income), income and franchise taxes and depreciation and
amortization (including amortization of capitalized subscriber
acquisition costs), further adjusted to exclude the effects of
stock based compensation, certain fees related to Vivint Flex Pay
program and certain unusual, non-cash, non-recurring and other
items.
“Covenant Adjusted EBITDA” is
defined as net income (loss) before interest expense (net of
interest income), income and franchise taxes and depreciation and
amortization (including amortization of capitalized subscriber
acquisition costs), further adjusted to exclude the effects of
certain contract sales to third parties, non-capitalized subscriber
acquisition costs, stock based compensation and certain unusual,
non-cash, nonrecurring and other items permitted in certain
covenant calculations under the agreements governing Vivint's
notes, the credit agreement governing Vivint’s term loan and the
credit agreement governing Vivint’s revolving credit
facility.
We believe that the
presentation of Adjusted EBITDA is appropriate to provide
additional information to investors because it is frequently used
by securities analysts, investors, and other interested parties in
their evaluation of the operating performance of companies in
industries similar to ours. We caution investors that amounts
presented in accordance with our definition of Adjusted EBITDA may
not be comparable to similar measures disclosed by other issuers,
because not all issuers and analysts calculate Adjusted EBITDA in
the same manner.
Adjusted EBITDA is not a
measurement of our financial performance under GAAP and should not
be considered as an alternative to net loss or any other
performance measures derived in accordance with GAAP or as an
alternative to cash flows from operating activities as a measure of
our liquidity.
1 Subject to regulatory approval 2 Based on 2018A–2020E Adjusted
EBITDA CAGR 3 Based on an assumed price of $10/share.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190916005406/en/
For Vivint Investors Dale
R. Gerard, (801) 705-8011 dgerard@vivint.com Media Liz Tanner, (801) 229-6956
liz.tanner@vivint.com
For Mosaic Gordon E. Runté, (212) 798-6082
grunte@fortress.com
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