Daily Management Review

$2.2 Billion Merger with SunEdison Terminated by Vivint Solar


03/08/2016




$2.2 Billion Merger with SunEdison Terminated by Vivint Solar
A deal that would have seen rooftop solar panel installer Vivint Solar Inc being taken over by solar energy company SunEdison Inc was called off on Tuesday by the former company after SunEdison failed to "consummate" the deal, said Vivint Solar Inc in a statement.
 
As SunEdison's finances and share price weakened, the cash-and-stock deal which was worth $2.2. billion came under heavy criticism from hedge funds and other investors as soon after the deal was forged last July.
 
While Vivint's shares were little changed at $5.20, SunEdison shares were up 41 percent at $2.68 in premarket trading.
 
Vivint said it intended to "seek all legal remedies available" as a result of the "willful breach" of the merger agreement by SunEdison.
 
"We believe both companies will be better off on their own," Cowen and Co analysts wrote in a note to clients. Breathing new life into the industry, the U.S. lawmakers had extended solar investment tax credits beyond 2016, Cowen and Co analysts .
 
SunEdison could be liable for an amount "well above" the breakup fee of $34 million following a court hearing or likely settlement as the Vivint deal was set to expire on March 18, the analysts said.
 
SunEdison was not immediately available for comment.

SunEdison has faced criticism for trying to grow too quickly through acquisitions that it could not afford even as the company, like many others in the industry, have been hit by the drop in oil prices.
 
There was a long-term debt of $9.77 billion as of September 30 for the company that has a market value of about $600 million. Citing an internal investigation into its financial position, SunEdison had said on March 1 that it would delay filing its annual report.
 
SunEdison "yieldco" TerraForm Power Inc had agreed to buy Vivint's rooftop solar portfolio for $799 million as a part of the Vivint deal. The former deal was revised down from $922 million under pressure from activist hedge fund Appaloosa Management.
 
Saying it was a departure from TerraForm's business model and would put shareholders at risk, Appaloosa Chief Executive David Tepper had called on TerraForm to "resist" the deal.
 
In an attempt to try to prevent TerraForm from buying assets from Vivint, which is controlled by Blackstone Group LP, Appaloosa has also sued SunEdison.
 
It was in talks with SunEdison regarding a board seat and that it was pressing for asset sales or even the sale of the company itself, David Einhorn's Greenlight Capital had said in January.
 
While Vivint's stock had fallen 52 percent, SunEdison's stock had lost 94 percent of its value since the Vivint deal was announced up to Monday's close.
 
(Surce:www.reuters.com) 






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