The Blackstone Group LP
) has agreed to buy Vivint Inc - a security provider, which offers
home automation and technology services - for a sum of about $2
billion. The deal is anticipated to conclude by the end of the
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According to Reuters, Vivint was looking for buyers and had
short-listed Blackstone, Ares Management LLC and GTCR LLC for this
purpose. Finally, Blackstone ran past others and grabbed the
opportunity. However, the official word on these developments is
Blackstone will be acquiring Vivint from its current sponsors -
The Goldman Sachs Group, Inc.
), Jupiter Partners and Peterson Partners - with Vivint's
management giving up a considerable part of their ownership
holdings. After the deal is closed, Blackstone will own majority of
the stake in the company.
Merrill Lynch - a wing of
Bank of America Corporation
) - and
) will manage the sale process. These firms valued the company at
more than 10 times its earnings before interest, taxes,
depreciation and amortization (EBITDA).
As per an executive at Blackstone, Vivint's scalability and
presence in an array of segments were the primary considerations
for the acquisition bid. In addition to this, such companies are
attractive to private equity firms mainly due to the stable
subscriber fees charged from the customers, which can contribute
towards servicing the debt taken on during an acquisition.
Moreover, this acquisition will help Blackstone tap into the
attractive growth trajectory of Vivint. Blackstone is expected to
provide capital to fund an expansion of Vivint's services, its
marketing potential to allure more clients and its access in
foreign markets. As a result, Blackstone's top line will definitely
get a boost in the future.
However, one thing that draws our maximum attention is the massive
number of consumer complaints that Vivint has received in the last
three years and the resultant legal settlements it had to face.
Considering this fact, it can be assumed that the acquisition may
hurt the reputation of Blackstone to some extent.
The shares of Blackstone currently retain a Zacks #4 Rank, which
translates into a short-term Sell rating.