Vivint Smart Home, a Blackstone Group-backed US smart home services provider, has agreed to merge with a subsidiary of Mosaic Acquisition, to create a home automation company worth $5.6 billion.

Mosaic Acquisition is a special purpose acquisition company of Japanese investment firm SoftBank Group.

Founded in 1999, Vivint Smart Home offers a suite of smart home products along with professional installation and cloud-enabled services to 1.5 million subscribers across 98% of the zip codes in the US and Canada.

The merger will rename Mosaic to Vivint Smart Home creating a new smart home public company.

Todd Pedersen – founder and CEO of Vivint Smart Home said: “We are excited to partner with Mosaic to unlock the next chapter of the Vivint growth story.

“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 Smart Home will use proceeds from the merger to pay down debt and strengthen the company to further exploit growth initiatives.

The home automation company is expected to have revenues of $1.3 billion for fiscal year 2020E and adjusted EBITDA of $530 million.

The Blackstone Group and its affiliated investment funds as well as other existing investors of Vivint Smart Home, including management, are retaining their full existing investment. Apart from that, Blackstone and Fortress Investment affiliates will also invest additional cash of $100 million and $125 million, respectively in the smart home services provider through an investment in the common stock of Mosaic Acquisition.

The current stockholders of Mosaic Acquisition and certain other investors who are investing $150 million in connection with the merger will hold remaining outstanding shares of Vivint.

Subject to approval by Mosaic Acquisition and Vivint Smart Home stockholders and other customary closing conditions, the transaction is expected to close during the fourth quarter of 2019 or the first quarter of 2020.

  Blackstone Group, Mosaic Acquisition, SoftBank Group, Todd Pedersen, Vivint Smart Home