The Blackstone Group LP
(
BX
) announced the completion of the acquisition of Vivint Inc, a
security provider, which offers home automation and technology
services. The acquisition worth more than $2 billion was made by
Blackstone Capital Partners VI, L.P., a fund managed by
Blackstone for its private equity investors.
The acquisition includes Vivint, Vivint Solar and 2GIG
Technologies. Vivint Solar is one of the fastest growing solar
companies in the U.S., which furnishes reasonably priced solar
solutions to residential customers. On the other hand, 2GIG
Technologies offers security and automation equipment for
residential and small business purposes.
Vivint had earlier short-listed Blackstone, Ares Management LLC
and GTCR LLC among the potential buyers. However, it was
Blackstone which toppled its rivals to acquire Vivint.
Blackstone acquired Vivint from its sponsors - including
The Goldman Sachs Group, Inc.
(
GS
), Jupiter Partners and Peterson Partners - with Vivint's
management giving up a considerable part of their ownership
holdings. Merrill Lynch - a wing of
Bank of America Corporation
(
BAC
) - and
Citigroup Inc.
(
C
) administered the sale process.
As per an executive at Blackstone, Vivint's efficiency and
presence in an array of segments were the primary considerations
during the acquisition bid. In addition to this, such companies
are attractive for private equity firms mainly due to the stable
subscriber fees charged from the customers, which can contribute
towards servicing the debt taken during an acquisition.
Moreover, this acquisition will help Blackstone tap into Vivint's
promising growth trajectory. Blackstone is expected to provide
capital to fund an expansion of Vivint's services, its marketing
potential to allure more clients and its access to foreign
markets. As a result, Blackstone's top line will definitely get a
boost in the near-term.
However, the massive number of consumer complaints that Vivint
received in the last three years and the resultant legal
settlements it had to face remain the primary concerns.
Considering this, it can be assumed that the acquisition may
taint the reputation of Blackstone to some extent.
The shares of Blackstone currently retain a Zacks #3 Rank, which
translates into a short-term Hold rating. However, with the
aforementioned acquisition having both positive and negative
impacts on the company's financials, we don't expect any
significant estimate revision in either direction. Thus, the
Zacks Rank is not expected to change in the near-term.
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