Vivint Smart Home Inc., a smart home technology company attempting to redefine the home experience through intelligently designed cloud-enabled solutions ranked No. 2 on the SDM 100, and Mosaic Acquisition Corp., a publicly traded special purpose acquisition company, 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, said, “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,” said 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, said, “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., said, “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.”

“We have followed Vivint for a long time and have deep respect for the company and its leadership team,” said Drew McKnight, managing partner of Fortress Investment Group LLC. “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.”

In connection with this transaction:

• Investment funds affiliated with The Blackstone Group Inc. 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, 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.