Vivint Solar (VSLR) Terminates Agreement to Be Acquired by SunEdison
Shares of Vivint Solar (VSLR) were trading down -0.31 or -5.95 percent to $4.90 per share in Tuesday’s premarket after news that the company had sent a letter to SunEdison (SUNE) terminating its agreement to be acquired by SunEdison for $2.2 billion. Vivint Solar stock closed at $5.21, unchanged from its previous daily close in Friday’s regular trading session.
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.
The letter, which was sent by Vivint to SunEdison Monday night, notified SunEdison that Vivint was terminating the merger agreement as a result of the failure of SunEdison to meet its obligations under the terms of the contract. The letter stated that, “SunEdison's failure to consummate the merger when required pursuant to the terms of the merger agreement constitutes a willful breach of the merger agreement, and Vivint Solar intends to seek all legal remedies available to it in respect of such willful breach.”
The deal for cash and stock was agreed upon in July of last year and was criticized by investors and hedge funds that held SunEdison stock, which was trading over $31.00 per share at the time. Shares of SunEdison have since lost over -93 percent of their value as the company was affected by the decline in oil prices and due to its aggressive acquisition strategy. Vivint Solar’s stock has lost over half of its value in the same time frame.
The transaction had already been delayed due to court challenges by activist hedge fund Appaloosa Management, who held a position in one of SunEdison’s yieldcos, TerraForm Power (TERP). TerraForm had agreed as part of the deal to buy Vivint’s rooftop solar portfolio for $799 million, downwardly revised from $922 million. Shares of Vivint were down over five percent in the premarket, while SunEdison shares were trading up almost +30 percent and TerraForm Power shares gained +11.5 percent.
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