Blackstone Group LP has agreed to buy home security provider Vivint Inc for more than $2 billion, betting that more households in North America will adopt its alarm, air conditioning and energy management systems.
Blackstone, the private equity company, is also taking over Vivint's affiliates, Vivint Solar Inc and 2GIG Technologies, as part of the transaction, which is set to close by year end, the companies said on Wednesday.
Reuters reported on Tuesday that Blackstone was nearing an agreement to buy Vivint in a deal that could value the company at as much as $2 billion.
Vivint, formerly known as APX Alarm Security Solutions, was founded by Todd Pedersen in 1999, and grew through investments from financial partners that have backed acquisitions over the past 13 years.
Management owns half of the company, while the other half is owned by Goldman Sachs Group Inc , as well as investment firms Jupiter Partners LLC and Peterson Partners.
The management team will stay.
Blackstone prevailed over Ares Management LLC and GTCR LLC, two other private equity bidders, people familiar with the matter said on Tuesday.
"Our partnership with Blackstone will enable us to expand upon our technology-based platform, accelerate the development and release of new services and enter new markets," Pedersen, the Vivint chief executive, said.
The Provo, Utah-based company is the largest home automation services company in North America and No. 2 residential security services provider, according to the company. A buyout by Blackstone will allow the company to expand further.
It serves some 600,000 customers throughout the United States and Canada, connecting home smart systems, including alarms, air conditioning and energy management. It also provides severe weather alerts to customers at risk of tornadoes.
Citigroup and Bank of America Merrill Lynch acted as financial advisers to Vivint. Blackstone Advisory Partners and Raymond James advised Blackstone.
(Additional reporting by Neha Alawadhi in Bangalore; Editing by Joyjeet Das and Jeffrey Benkoe)