Sunrun to acquire Vivint Solar for $3.2 billion in all-stock transaction

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Sunrun, the leading provider of residential solar, battery storage and energy services, and Vivint Solar, a residential solar provider in the U.S, have entered into an agreement under which Sunrun will acquire Vivint Solar in an all-stock transaction.

Ravi Manghani, WoodMac’s head of solar told pv magazine, “This acquisition, paired with Tesla’s announcement last week to provide some of the cheapest residential solar offerings, indicates that the market is longing for cost efficiencies. With the impending ITC stepdown, the next frontier of residential solar market plays will have to be on the cost side. Sunrun has made a move to gain a cost advantage through acquisition.”

The combined merged entity will have a value of $9.2 billion based on the closing price of Sunrun’s shares on July 6, 2020. Vivint Solar stockholders are expected to own approximately 36% and Sunrun stockholders are expected to own approximately 64% of the fully diluted shares of the combined company — providing a 10% premium for Vivint Solar shares based on closing prices on July 6, 2020.

“Vivint Solar adds an important and high-quality sales channel that enables our combined company to reach more households and raise awareness about the benefits of home solar and batteries,” said Lynn Jurich, Sunrun’s CEO.

The company will have a combined base of nearly 500,000 customers creating a leading owner of solar assets globally, with over 3 gigawatts of solar assets on the balance sheet.

Sunrun believes that residential solar, at only 3% penetration in the U.S., still has plenty of room for growth.

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Sunrun expects to deliver “meaningful cost synergies, estimated at $90 million on an annual basis.” The firm expects to “benefit from efficiencies in large-scale project finance capital raising activities.”

The acquisition is expected to be completed during the fourth quarter of 2020, subject to approval by Vivint Solar and Sunrun stockholders and regulatory approvals. Sunrun’s board of directors will be expanded by adding two directors, one of which is expected to be Vivint Solar’s CEO, David Bywater.