Sunrun, Vivint Solar to Sign $3.2B Deal

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San Francisco-based Sunrun and competitor Vivint Solar have entered into a definitive agreement under which Sunrun will acquire the Utah-based company in an all-stock transaction. Once the $3.2 billion transaction is finalized, the new entity will be one of the world’s largest providers of solar equipment.

The acquisition will expand Sunrun’s customer base to nearly 500,000 customers and more than 3 gigawatts of solar assets on the balance sheet, up from 2 gigawatts and almost 300,000 customers. Despite these solid numbers, Sunrun’s announcement cited ongoing growth potential for residential solar products, reporting that only 3 percent of U.S. homes are equipped with solar systems.  

The two companies share similar business models, both selling residential solar (photovoltaic panels and batteries) through leases, loans and direct sales. Despite the similarities, the timing of the transaction during pandemic times—when many companies reported shutdowns and record-low sales—is somewhat questionable as further infections might continue to dampen demand for solar power, but the market could very well be strong enough weather the health crisis. 

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The acquisition is expected to be finalized in the fourth quarter of 2020, subject to approval by Sunrun and Vivint stockholders and regulators. Under the transaction’s terms, each share of Vivint Solar common stock will be exchanged for 0.55 shares of Sunrun common stock. As such, Vivint Solar stockholders are estimated to own roughly 36 percent and Sunrun stockholders approximately 64 percent of the shares of the combined company.

In addition, Sunrun’s board of directors will add two directors, one of which will be Vivint Solar’s CEO, David Bywater. Credit Suisse Securities serves as Sunrun’s financial advisor, while Morgan Stanley and BofA Securities advised Vivint Solar.