Residential PV major Sunrun is to acquire rival Vivint Solar in a $1.46bn all-stock deal, a moved aimed at enabling it to better compete with Tesla-owned SolarCity in a US market that was booming before the coronavirus pandemic.
Vivint shareholders, which include private equity group Blackstone with almost 56% stake, will receive $0.55 a share of Sunrun for each share held, representing a premium of about 10.4% to Vivint’s closing Monday price of $10.63.
The deal, valued at $3.2bn, was unanimously approved by the boards of both companies and is expected to close in the fourth quarter, subject to regulatory approvals.
Sunrun stockholders are expected to own 64% of the fully diluted shares of the combined company and Vivint shareholder 36%.
Sunrun with Vivint, which together will have a customer base of nearly 500,000 and more than 3GW of PV assets on its balance sheet, estimate the deal will generate $90m in annual cost savings through synergies.
"This transaction will increase our scale and grow our energy services network to help replace centralized, polluting power plants and accelerate the transition to a 100% clean energy future,” said Sunrun CEO Lynn Jurich.
She noted that residential solar has 3% penetration in the US and the “runway” for growth remains massive.
First quarter US residential solar installations totaled a national record 810MW, up 31% from the same 2019 period, with 2020 forecast to be a banner year before Covid-19.
Major state markets such as California, New Jersey and New York in mid- to late-March began imposing stay-at-home orders, which inhibited sales, installations and interconnections. Massive furloughs that affected millions of homeowners and contagion concerns further slowed residential PV activity.
The market is expected to recover once the pandemic eventually eases, the economy rebounds and homeowners recover jobs. Installations this year will also benefit from the 30% federal investment tax credit.