NRG Energy, a power company, has entered into a definitive agreement to acquire Vivint Smart Home in an all-cash transaction at $12 per share totaling $2.8 billion. The transaction is expected to close in the first quarter of 2023.

NRG will acquire 100% of the outstanding equity of Vivint for a total transaction value of $5.2 billion, which consists of approximately $2.8 billion in cash and the assumption of $2.4 billion of debt (net of cash). This consideration represents a premium of approximately 33% to Vivint’s closing share price as on December 5, 2022.

Vivint Smart Home is a smart grid solutions company that offers an intelligent home platform serving more than 1.9 million customers throughout the United States, with products ranging from home security systems to smart home devices. The company recently announced a new feature that allows its customers to view the solar production data from their solar panels directly in the Vivint app, integrating solar energy into the Vivint Smart Home experience.

The acquisition is expected to help accelerate NRG’s new growth strategy and diversify the company’s financial profile.

“Customers want simple, connected, and customized experiences that provide peace of mind. Vivint’s smart home technology strengthens our retail platform, improves our customer experience, and increases customer lifetime value.” Said Mauricio Gutierrez, President and CEO of NRG.

Combined, the companies aim to become a leading home solutions provider with an approximate network of 7.4 million customers across North America and offer an end-to-end ecosystem driven by data and insights.

NRG intends to complete its existing $1 billion share repurchase program over the near term and expects to use its excess free cash flow to fund the Vivint acquisition, reduce acquisition-related debt, and maintain its common stock dividend growth policy.

Goldman Sachs & Co is serving as NRG’s financial advisor, with White & Case serving as legal counsel.

For Vivint, J.P. Morgan Securities serves as the financial advisor, with Simpson Thacher & Bartlett as legal counsel.

According to Mercom’s 9M And Q3 2022 Funding and M&A Report for Storage, Grid & Efficiency. In 9M 2022, there were 18 Smart Grid M&A transactions (four disclosed) compared to 17 transactions (one disclosed) in 9M 2021.