Deutsche Bank analyst Vishal Shah has said US installer SolarCity could be one of the indirect winners from news that SunEdison and its yieldco, TerraForm Power, are to acquire residential installer Vivint Solar.
Responding to this morning’s announcement of the US$2 billion Vivint Solar buyout, Shah said in a briefing note to investors that the move was “positive” for the solar sector overall.
Try Premium for just $1
- Full premium access for the first month at only $1
- Converts to an annual rate after 30 days unless cancelled
- Cancel anytime during the trial period
Premium Benefits
- Expert industry analysis and interviews
- Digital access to PV Tech Power journal
- Exclusive event discounts
Or get the full Premium subscription right away
Or continue reading this article for free
But he went on to say that it was also positive news specifically for SolarCity, which is one of the few heavyweight US downstream players yet to form a yieldco, despite speculation that it could go down this route.
“SolarCity has talked about evaluating a potential yieldco in future and this acquisition makes that strategy more credible,” Shah said.
On SunEdison and TerraForm Power’s prospects following the deal, Shah was also upbeat.
“This acquisition also accelerates SUNE's [SunEdison’s] presence into the residential solar market where entry barriers are high and profit margins are more attractive. This transaction also reiterates our view that SUNE/TERP [SunEdison/Terraform Power] platform is best positioned to acquire assets due to cost of capital/structure and scale advantages over other players in the industry,” he wrote.
RBC Capital Markets analyst Mahesh Sanganeria took a similar line, writing in a briefing note: “In a first read, we view the acquisition as a positive to SunEdison as it accelerates company’s expansion into the US residential solar market.”
However, off the back of the acquisition news, New York City-based securities firm Faruqi & Faruqi announced it was investigating Vivint Solar’s board for “potential breaches of fiduciary duties” in connection with the sale.
The firm maintained that under the US$2 billion cash and stock sale Vivint stockholders would only receive US$16.50 a share whereas the median share price target is US$20 per share, and could go higher.
