Sunrun to acquire Vivint Solar in US$3.2bn US market shake-up

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email
Image: Nasdaq.

UPDATED: US residential solar installer Sunrun is to acquire rival Vivint Solar as part of a US$3.2 billion all-stock deal that constitutes a major shake-up for the US solar market.

The two parties have entered into a definitive agreement which will see Sunrun acquire Vivint, with each share of Vivint’s common stock exchanged for 0.55 shares of Sunrun common stock. As a result, Vivint stockholders are expected to hold roughly one-third (36%) of the resultant company, with Sunrun stockholders taking on the remaining 64%.

The deal constitutes a major shake-up for the US residential solar market. The two companies said their combined customer base would make up nearly 500,000 customers and over 3GW of installs on its balance sheet.

Benefits and rationale

Furthermore, the companies expect to realise cost synergies to the tune of US$90 million per year post-acquisition, with Sunrun specifically noting the potential to consolidate and optimise the number of branches it maintains, reduce spending on technology systems and lean on enhanced buying power.

Meanwhile, Sunrun also said the deal would represent an opportunity to upscale its proprietary racking technology, while the addition of batteries to its combined base of customers which, in addition to the potential of larger grid services partnerships, has been identified as an opportunity for the combined entity to deliver “considerable value”.

Both Sunrun and Vivint have attested to the scale it will give the combined companies, both in its ability to “accelerate the adoption of solar” in the US residential market and in its R&D. The increased scale and operating efficiencies realised will result in a reduced cost structure, the companies said, reducing the cost of installing solar for customers, while combining R&D efforts and focuses could bring about more advanced customer solutions, with Sunrun specifically pointing towards virtual power plants as a potential destination.

Accelerated pace

Lynn Jurich, CEO at Sunrun, said Vivint would add an “important and high-quality” sales channel that would allow the company to reach more households in the future.

“This transaction will increase our scale and grow our energy services network to help replace centralised, polluting power plants and accelerate the transition to a 100% clean energy future. We admire Vivint Solar and its employees, and look forward to working together as we integrate the two companies,” she said.

The deal is expected to close in Q4 2020, subject to approval by Vivint and Sunrun stockholders and regulators.

Post-transaction, Sunrun’s board of directors will be expanded by a further two seats, one of which is to be occupied by Vivint Solar chief David Bywater.

“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. We believe this transaction will create value for our customers, our shareholders, and our partners,” Bywater added.

US market dominance

News of the merger has broken amidst differing fortunes for those in the US residential solar market. The start of the year saw Sunrun report total 2019 installs of 413MW, cementing a hard-earned lead at the top of the chain.

But figures for Q1 2020 demonstrated the usual seasonality and the company tumbled back into the red as a result. Forecasting a continued contraction into Q2 and Q3 as a result of the ongoing pandemic, Jurich detailed how the company had taken all of its sales activity online, but warned it would not be enough to impact on its full year guidance.

Vivint meanwhile achieved 2019 installs of just over half that of Sunrun – 233.1MW – contributing towards full year revenue growth of 17% to US341 million. But losses swelled to US423.3 million and the company said it was putting together contingency plans to cope with the expected downturn in installs over 2020.

The company has since been on a funding drive, securing a raft of finance packages to fend off any impact from COVID on its liquidity throughout Q2 and Q3.

Read Next

May 6, 2021
Sunrun has increased its guidance for 2021 after a first quarter performance which has put the company on track to record its best ever year, CEO Lynn Jurich said.
May 5, 2021
SHV Energy, a Netherlands-based liquified petroleum gas (LPG) distributor, has acquired a majority stake in Indian solar developer SunSource Energy.
PV Tech Premium
April 30, 2021
Elon Musk pitched a new vision for Tesla’s home solar-storage product this week, labelling it a “profound” alternative to the status quo. Liam Stoker analyses Tesla’s newly-described offering, the integration of Tesla’s solar and storage into a single product and explores benefits that may have been overlooked.
April 29, 2021
Sunnova has reported a surge in Q1 2021 revenue as the US residential solar installer lauded its software and services capabilities.
April 28, 2021
South Australia saw record low daytime energy prices in the first three months of this year, driven by a sharp uptake in renewable power resources.
PV Tech Premium
April 26, 2021
LONGi’s ascent to the top of the solar module shipments league table captured headlines last week, but it also cements the view that consolidation in the sector is inevitable, with an oligarchy of majors dominating market share. Carrie Xiao assesses the prospects of those top five companies as 2021 heats up.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
May 26, 2021
Session 1 - 7:00 AM (BST) | Session 2 - 5:00 PM (BST)
Solar Media Events
June 15, 2021
Solar Media Events
July 6, 2021
Solar Media Events
August 24, 2021