Vivint Solar (VSLR) to be Acquired by SunEdison for $2.2B
Shares of Vivint Solar (VSLR) were trading up +4.24 or +38.97 percent to $15.12 per share in Monday's premarket after news broke early this morning that the company would be acquired by SunEdison Inc. (SUNE) and its TerraForm Power Inc. (TERP) unit in a deal worth approximately $2.2 billion.
Launched in 2011 by parent company Vivint Inc., Lehi, Utah based Vivint solar is a U.S. solar energy company with operations in Arizona, California, Hawaii, Maryland, Massachusetts, New Jersey and New York, as well as the District of Colombia. The company designs, installs and provides maintenance for residential photovoltaic solar energy systems. Through a "power purchase agreement the company installs solar panels to homes at no cost to the homeowner in exchange for the homeowner agreeing to purchase the power produced by the solar panels. The company also provides a lease agreement, which charges the customer monthly per kilowatt hour based on the amount of energy the system produces. Vivint Solar went public at $16 per share in 2014 and employs about 3,000 people.
Headquartered in both Belmont, California and Maryland Heights, Missouri, SunEdison is the world's largest renewable energy company. Originally known as MEMC Electronic Materials the company was a former business unit of the Monsanto Company (MON) until its sale in 1989. SunEdison develops builds and operates solar and wind energy power plants. In addition, the company manufactures monocrystaline silicon ingots, silicon wafers, solar modules and solar energy systems.
In the announcement made early this morning, both companies signed a definitive merger agreement in which SunEdison will acquire Vivint Solar for a combination of cash, SunEdison convertible notes and SunEdison common stock. SunEdison will pay Vivint shareholders $9.89 in cash, $3.30 in SunEdison notes and $3.31 in SunEdison common stock. The deal works out to $16.50 per Vivint share, a +52 percent premium to Vivint stock's closing price on Friday.
Vivint Solar's Chief Executive Officer, Greg Butterfield noted in this morning's press release that, "This transaction with SunEdison delivers to Vivint Solar's stockholders excellent value for the business we have built over the last four years. SunEdison and TerraForm Power have built a unique model that recognizes the value of long-term, predictable, contracted cash flows from our residential solar portfolio while providing access to a broad pool of financing at an attractive cost of capital. We are excited to join the SunEdison residential and small commercial team which has successfully developed a wide range of channels complementing those at Vivint Solar, both in the U.S. and globally.
As part of the deal, SunEdison entered into a definitive purchase agreement with a subsidiary of TerraForm Power, which upon the completion of the SunEdison acquisition of Vivint Solar, will acquire Vivint Solar's rooftop solar portfolio for $922 million in cash. The portfolio consists of 523 megawatts that is expected to be installed by the end of this year.
Shareholders of both companies are showing their approval in this morning's premarket, with both SunEdison stock and Vivint stock gaining significantly. Vivint stock is currently up almost 43 percent, while SunEdison stock is up over 4 percent.
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