SunEdison and Vivint Solar have signed a definitive merger agreement pursuant to which SunEdison will acquire Vivint Solar, a U.S. provider of residential solar systems, for approximately $2.2 billion, payable in a combination of cash, shares of SunEdison common stock and SunEdison convertible notes.
Concurrently with the completion of SunEdison’s acquisition of Vivint Solar, TerraForm Power, a SunEdison subsidiary, will acquire Vivint Solar’s rooftop solar portfolio, consisting of 523 megawatts (MW) expected to be installed by year-end 2015, for $922 million in cash (TERP Purchase Agreement). The 523 MW of residential solar projects are expected to provide a 10-year average unlevered CAFD of $81 million, and provide a 10-year average levered cash-on-cash yield of 9.5 percent.
As part of the deal, TerraForm Power will acquire future completed residential and small commercial projects from SunEdison’s expanded residential and small commercial (RSC) business unit. According to a press release, The rooftop solar portfolio is expected to add a growing, high-quality, long-term contracted and geographically diverse asset base to the SunEdison family of companies.
The Vivint Solar management team will join SunEdison, and SunEdison’s existing RSC development business and the Vivint Solar team will be merged.
“SunEdison’s acquisition of Vivint Solar is a logical next step in the transformation of our platform after the successful execution of our First Wind acquisition in January 2015,” said Ahmad Chatila, SunEdison chief executive officer and TerraForm Power chairman. “We expect the Vivint Solar transaction to create significant value for our stockholders through the accretion in our TerraForm Power ownership, the acceleration of our Incentive Distribution Rights and an immediate expansion of our capacity and bandwidth to grow our residential business in the U.S. and globally. As of the fourth quarter of 2015, our organic growth and recent acquisitions will put SunEdison on track to deploy more than 1 gigawatt per quarter.”
Vivint Solar’s CEO Greg Butterfield said, “This transaction with SunEdison delivers to Vivint Solar’s stockholders excellent value for the business we have built over the last four years. SunEdison and TerraForm Power have built a unique model that recognizes the value of long-term, predictable, contracted cash flows from our residential solar portfolio while providing access to a broad pool of financing at an attractive cost of capital.”
Peter Wallace, Vivint Solar’s board chair and Blackstone’s senior managing director, said, “We are pleased by the tremendous success of Vivint Solar, which the exceptional management team has built into one of the leading providers of distributed solar energy in the United States in just four years. We believe this transaction positions the company’s asset portfolio for accelerated future growth as part of SunEdison and TerraForm Power. We look forward to participating in its future success as a significant investor in SunEdison going forward.”
At the announcement, SunEdison initiated 2016 annual guidance of 4,200 MW to 4,500 MW, a 50 percent increase from its prior outlook of 2,800 MW to 3,000 MW, and TerraForm Power is raising its prior 2016 dividend per share guidance of $1.70 to $1.75, a 30 percent year-over-year increase compared with 2015 annual guidance.
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