Sunrun to buy Vivint in an all-stock deal

Sunrun Inc, America’s largest residential solar company, has announced that it will acquire its leading competitor Vivint Solar in an all-stock deal. The deal will be worth $3.2 billion and create a business that caters to about 500,000 customers. The deal has been unanimously approved by both companies’ boards and includes debt. The annual cost savings arising out of the deal are estimated to be around $90 million.

As per the terms of the deal, Vivint shareholders will get 0.55 shares of Sunrun stock for every share held. Sunrun stock closed at $21.45 on Monday, 6th July 2020 while Vivint solar stock closed at $10.63 on the same day. The deal represents a 10.4% premium to Vivint’s closing price for the day. Credit Suisse advised Sunrun while Morgan Stanley and BofA Securities both advised Vivint on the deal.

Sunrun had recently overtaken Tesla to become America’s top residential solar panel installer. Well-known private equity major Blackstone Group holds a 55.84% stake in Vivint Solar. The combined entity of Sunrun and Vivint will better allow it to compete with Tesla’s Solar City. Sunrun and Vivint represent two of the top 3 residential solar market players. Tesla stock closed at $1371.58 on 6th July 2020.

According to Lynn Jurich, CEO and Co-Founder, Sunrun, “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.”

Sunrun mainly focuses on financing and installing solar panels and batteries as manufacturing is not the company’s core strength. The runway for growth in the residential solar product sector is significant as only 3% of American households are currently estimated to be equipped with such products.