VVNT - Vivint Smart Home gains after NRG starts notes offering to partially fund takeout

Vivint Smart Homes ( NYSE: VVNT ) rose 5.2% after NRG Energy ( NYSE: NRG ) started a notes offering to fund its acquisition of the smart home products company.

NRG said it intends to use proceeds from an offering of $740m aggregate principal amount of senior secured first lien notes due 2033 to partially fund the purchase of Vivint Smart Homes ( VVNT ), according to a statement.

The NRG offering comes after Vivint Home ( VVNT ) shares fell 5.4% last Tuesday on some investor fear the NRG ( NRG ) may try to cut the price of its acquisition or walk away after a $190 million judgement against the company in a lawsuit.

A North Carolina jury ruled last month that Vivint Smart ( VVNT ) must past $190 million in damages over a lawsuit filed by CPI Security Systems in 2020 related to alleged historical practices by certain Vivint sales personnel.

The legal judgement against Vivint Smart ( VVNT ) comes after NRG Energy ( NRG ) agreed to acquire Vivint Smart or $12/share, or $5.2 billion in cash and debt, in December.

NRG Energy ( NRG ) said in a statement to Seeking Alpha last Tuesday that it's "evaluating the decision" and its options. Vivint Smart ( VVNT ) said it believes the verdict was not "legally or factually supported" and plans to file an appeal.

"Given the attention on the deal, we query whether the latest judgement could drive a revision of acquisition term," BofA analyst Julien Dumoulin-Smith wrote in a note last Tuesday. "Given the near term closing contemplated (seemingly previously implied by end of February) watch this carefully in the week ahead for any shifts."

Vivint Smart ( VVNT ) short interest is 15 .5%

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