Mosaic Re-Strikes Their Deal with Vivint

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Mosaic Re-Strikes Their Deal with Vivint

Dec 19, 2019 INTEL by Kristi Marvin

Moves Vote Date to January 14th, 2020

Mosaic Acquisition Corp. (MOSC), filed a new super 8-K this morning announcing that they had re-struck their deal with Vivint Smart Home, Inc. (“Vivint”). This is a big re-cut since the new enterprise value is expected to be approximately $4.1 billion, down from it’s previous $5.6 billion.   The new transaction terms imply an estimated 2020 Adjusted EBITDA multiple of approximately 7.75x.

Additionally, Mosaic has tapped their “rich uncle”, Fortress, which has agreed to an additional $50 million investment through open market purchases, or directly from Mosaic, prior to the closing.  This is in addition to their previously announced $125 million investment.

Their other rich uncle, their Forward Purchaser (not named), has also agreed to an additional $50 million investment of common stock at $10.00. As consideration for the additional investment, 25% of Mosaic Sponsor Shares and Private Placement Warrants will be forfeited and Mosaic will issue to the Forward Purchaser an equal number of shares of Mosaic Class A common stock and warrants concurrently with the consummation of the merger.  Mosaic had 8,625,000 Sponsor Shares and 5,933,333 at IPO, so that means they’ll be forfeiting 2,156,250 shares and 1,483,333 warrants and issuing a like amount to the Forward Purchaser, for an effective purchase price of $6.98.

Further changes include an additional 12.5 million of Class A common shares to be issued to Vivint Smart Home’s holders upon achievement of a $17.50 earnout threshold and a decrease in the termination fee to $32.4 million.

In summary, based on those assumptions, in total, there will be~ $790 million of net cash proceeds at closing, including:

  • The $150 million of forward purchase commitments obtained in connection with Mosaic’s IPO (including a Fortress affiliate)
  • The previously announced $125 million investment in Vivint by Fortress affiliates
  • The previously announced $100 million investment in Vivint by Blackstone
  • The additional investment of up to $50 million by Fortress affiliates
  • The additional $50 million investment from a forward purchaser

Furthermore the shareholder vote, which had originally been moved to tomorrow, December 20th, has now been moved again to January 14th, 2020. This gives Mosaic enough time to market the new terms and give investors a chance to digest the changes. As such, a new presentation outlining the new deal will most likely be filed shortly.

All told, this is a very positive change.  It’s a significant cut and is reducing the enterprise value by roughly 27%.  Let’s see if this generates demand for the long-only crowd.

 

 

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