NRG says the transaction will improve and diversify its financial profile with more predictable earnings through Vivint’s subscription-based model.
HOUSTON — NRG Energy (NYSE: NRG) and Vivint Smart Home (NYSE: VVNT) announce they have entered into a definitive agreement under which NRG will acquire Vivint for $12 per share or $2.8 billion in an all-cash transaction with an implied multiple of 6.3x run-rate Enterprise Value to Adjusted EBITDA.
The agreement has been unanimously approved by the boards of directors of both companies.
Vivint Smart Home is now a leading smart home platform that aims to help its nearly two million customers live intelligently by providing them with technology, products, and services to create a smarter, more efficient, and safer home, according to the company.
Vivint says it delivers an engaging customer experience through multiple devices united into a single expandable platform that incorporates artificial intelligence (AI) and machine learning into its operating system. The company’s vertically integrated business model includes hardware, software, sales, installation, support, and professional monitoring, enabling superior customer experiences and a complete end-to-end smart home experience.
The acquisition is said to accelerate the realization of NRG’s consumer-focused growth strategy and creates the leading essential home services platform fueled by market-leading brands, unparalleled insights, proprietary technologies, and complementary sales channels.
The transaction improves and diversifies NRG’s financial profile while also expanding the total market opportunity available to NRG, according to the announcement. The annual run-rate Adjusted EBITDA, inclusive of $100 million of run-rate synergies, is $835 million.
“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,” says Mauricio Gutierrez, president and CEO of NRG. “The acquisition of Vivint is a transformational step in achieving our vision. Customers want simple, connected, and customized experiences that provide peace of mind. Vivint’s smart home technology strengthens our retail platform, improves our customer experience, and increases customer lifetime value. I am excited to welcome Vivint to the NRG family.”
The combined company will result in the creation of a home solutions provider with an extensive network of approximately 7.4 million customers across North America, which the companies say will represent a substantial cross-sell opportunity through market-leading brands and complementary sales channels.
“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,” adds 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. On behalf of our board and management team, I thank the hard-working Vivint employees for the significant role they have played in this important milestone.”
NRG will acquire 100% of the outstanding equity of Vivint for a total transaction value of $5.2 billion, which consists of approximately $2.8 billion in cash and the assumption of $2.4 billion of debt (net of cash), which benefits from attractive terms and pricing, according to the announcement. This consideration represents a premium of approximately 33% to Vivint’s closing share price on Dec. 5, 2022.
The transaction is expected to close in the first quarter of 2023 and is subject to customary closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.