Houston-based power company NRG Energy Inc. has entered into an agreement to buy Vivint Smart Home Inc., a Utah home security and home automation company. NRG will pay $2.8 billion in cash and assume $2.4 billion of debt as part of the deal, making the total value of the transaction about $5.2 billion, according to industry analysts.
The buyout was unanimously approved by the boards of both companies and the deal is expected to close in the first quarter of next year, NRG said in a release.
The $12 per share deal is at a premium of 33.5 percent above Vivint’s closing stock price on Dec. 5. Premarket trading of Vivint shares following the announcement of the acquisition showed a nearly 32 percent rise in Vivint’s price to just shy of the offer price, while NRG shares dropped 4.5 percent to $39.
Vivint makes a range of home security products and hubs that help in controlling other automation gadgets, such as Amazon Echo and Google Home, through a central touchscreen panel. Together, the companies will serve over 7.4 million customers across North America, a joint statement said.
Provo-based Vivint was bought by New York-based investment company Blackstone for over $2 billion in 2012. Vivint then became publicly listed through a reverse merger with Mosaic Acquisition, a special-purpose acquisition company of SoftBank Corp.
“We are pleased to announce a transaction that delivers immediate and compelling cash value to Vivint’s stockholders while also presenting significant opportunities to drive our company’s continued success in the years to come,” said David Bywater, CEO of Vivint Smart Home. “Our agreement with NRG is the culmination of our board’s ongoing pursuit of maximizing value for Vivint stockholders and is a testament to the strength of the Vivint brand, capabilities and proven industry leadership. We look forward to working with NRG to create exciting opportunities for Vivint as part of a larger platform.”
“Last year at our investor day, we presented our strategic roadmap to becoming the leading provider of essential services for homes and businesses, informed by consumer trends and underpinned by disciplined execution,” said Mauricio Gutierrez, president and CEO of NRG. “The acquisition of Vivint is a transformational step in achieving our vision. I am excited to welcome Vivint to the NRG family.”
Vivint said in November that it expected to have more than 1.9 million subscribers by the end of the year. The company has said its average customer installs about 15 devices in their home, interacts with their smart-home system more than 12 times a day and retains service for about nine years. It is targeting $1.67 billion in revenue this year.