Sunrun to Buy Vivint in $3.2B Solar Mega-Deal – CFO

Sunrun has agreed to acquire Vivint Solar for $3.2 billion in a major residential solar industry consolidation aimed at creating economies of scale to lower customer acquisition costs.

The all-stock merger of two of the top three residential solar companies solidifies Sunrun’s leadership of the market. The combined company will have a share of more than 15% while nearest rival Tesla, which acquired onetime leader SolarCity in 2014, has 6%.

Sunrun has focused on financing and installing solar panels and batteries while Vivint designs and installs solar energy systems for homeowners.

“This is a transformational opportunity to generate consumer and shareholder value, realize annual cost synergies and bring cleaner, affordable energy to more homes,” Sunrun said in a news release.

The company expects the deal will deliver estimated cost synergies of $90 million a year.

“There’s a mandate to continue to lower costs,” Sunrun CEO Lynn Jurich said during a conference call about the deal. “The businesses are so complimentary. So for us this was the right time to pursue this.”

Residential solar has reached only 3% penetration in U.S. but as Forbes reports, the industry’s business model “requires finding vast numbers of new customers looking to put solar on their roof. Installers expend vast resources on sales and marketing teams that, in many cases, go door-to-door to sign up new customers.”

With the COVID-19 pandemic making door-to-door sales problematic, “Sunrun and Vivint get a larger megaphone from which to advertise digitally, and the ability to scale up targeted in-person marketing across a variety of distribution channels when lockdowns ease,” Forbes said.

The combined company will have a customer base of nearly 500,000, with more than 3 gigawatts of solar assets on the balance sheet.

“Joining forces with Sunrun will allow us to reach a broader set of customers and accelerate the pace of clean energy adoption and grid modernization,” Vivint CEO David Bywater said.

Sunrun shares jumped 22.6% to $26.17 in trading Tuesday while Vivint shares soared 38.2% to $14.69. Under the terms of the deal, Vivint shareholders will receive 0.55 shares of Sunrun for each Vivint share.

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Source: https://www.cfo.com/ma/2020/07/sunrun-to-buy-vivint-in-3-2b-solar-mega-deal/

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