Highly touted $2.2B merger deal falls apart

Source: Christa Marshall, E&E reporter • Posted: Wednesday, March 9, 2016

Vivint Solar Inc. announced today it is terminating its merger plans with energy giant SunEdison Inc.

In a statement on the termination, rooftop installer Vivint said SunEdison’s failure to “consummate the merger” according to the agreement’s original terms constituted “a willful breach.” After delivering a letter to SunEdison, the company said it would seek all legal remedies available. SunEdison did not immediately respond to requests for comment.

The $2.2 billion deal announced last year came under fire from investors. MarketWatch reported, for example, that banks like Goldman Sachs Group Inc. stalled at providing loans to fund the acquisition after SunEdison did not provide timely financial statements.

“This is the largest single acquisition in U.S. solar to fall apart to date,” said Cory Honeyman, a senior solar analyst at GTM Research.

Honeyman said there had been an “ongoing back and forth about whether or not this acquisition would happen,” because of SunEdison’s financial troubles over the past couple of years. Last year, for example, SunEdison reduced its workforce after a spending spree (Greenwire, Oct. 6, 2015). The company took on too much debt to finance acquisitions at a rate outpacing its growth, according to Honeyman.

Market analysts like Cowen and Co. said both companies could be better off, considering the financial pressure on SunEdison. With the extension of the investment tax credit and adequate access to capital, Vivint should “continue to grow its business as a standalone company,” the firm said in a research note.

Honeyman said the outlook for solar remains bright. The Solar Energy Industries Association reported last month, for example, that solar beat out natural gas capacity additions for the first time ever in 2015, supplying 29.5 percent of all new electric generating capacity.

There also has been a wave of recent solar deals. Today, SolarCity Corp. — backed by Tesla Motors Inc. CEO Elon Musk — announced a plan with Whole Foods Market Inc. to retrofit up to 100 of its stores across the country with rooftop solar.