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.
The Vivint Solar management team will join SunEdison, and SunEdison’s existing RSC development business and the Vivint Solar team will be merged.
Vivint Solar’s CEO Greg Butterfield said, “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.”
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.