SunEdison buys Vivint for $2.2 billion to expand residential business

Mon Jul 20, 2015 12:40pm EDT
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By Anannya Pramanick and Shubhankar Chakravorty

(Reuters) - SunEdison Inc SUNE.N agreed to buy Vivint Solar Inc (VSLR.N: Quote), the second-biggest U.S. solar panel installer, in a deal valued at about $2.2 billion, speeding up its expansion in the booming residential solar market.

Demand for Vivint's residential solar systems has soared as the company that went public last October allows homeowners to lease its systems rather than buying them outright. A decline in equipment costs has also helped.

The distributed generation business, or power produced for local consumption, is expected to contribute about 28 percent of SunEdison's 2016 revenue, post acquisition, from an estimated 18 percent in 2015, S&P Capital IQ analyst Angelo Zino said.

Installers command higher margins from the residential solar market than more aggresively priced utility-scale projects.

Vivint, controlled by Blackstone Group LP (BX.N: Quote), operates in seven states, including California and New York.

SunEdison will give Vivint stockholders $9.89 in cash, $3.31 in stock and $3.30 in notes for every share held. The offer works out to $16.50 per share — a 51.7 percent premium to Vivint's Friday close.

Vivint shares jumped as much as 46.4 percent to $15.93 on the New York Stock Exchange on Monday. SunEdison shares were up 2.9 percent at $32.48, after touching a near-seven-year high of $33.44.

SunEdison also said its unit TerraForm Power Inc (TERP.O: Quote) would eventually buy Vivint's rooftop solar portfolio of 523 megawatts, expected to be installed this year, for $922 million.   Continued...

Vivint Solar CEO Greg Butterfield (3rd R)   ring the opening bell at the New York Stock Exchange  October 1, 2014.  REUTERS/Brendan McDermid