Update: Oct. 8, 2020: Sunrun said Thursday it has completed its acquisition of residential solar provider Vivint Solar, following regulatory and shareholder approval. The enterprise value of the clean energy company is estimated at $22 billion.
- Sunrun announced on Monday a deal to acquire residential energy competitor Vivint Solar, a move that is expected to deliver about $90 million in annual cost savings between the companies.
- Sunrun will buy Vivint for about $1.46 billion in an all-stock deal, and Sunrun shareholders will hold about 64% of the combined company. The companies' boards unanimously approved the deal, valued at $3.2 billion including debt.
- The combined entity will be valued at approximately $9.2 billion, based on Sunrun's stock price on Monday, and the deal is expected to be completed by the fourth quarter of 2020.
The consolidation of the top two residential solar companies in the U.S. comes as both companies have adapted to growing demand in the distributed solar sector.
Sunrun offers energy storage and grid services, working with utilities and grid operators on virtual power plants that combine distributed energy systems. Sunrun expects to offer battery storage to the combined base of nearly 500,000 solar customers.
Vivint has targeted customer adoption through a direct-to-homes sales channel, similar to other utility platforms to ease customer access to services and drive product purchases.
Besides sharing corporate functions including a legal and policy division, Sunrun seeks to access other meaningful cost synergies by reducing redundant spending on technology systems, scaling proprietary technology and improving sourcing capabilities within their supply chains.
"We expect to benefit from efficiencies in large scale project finance capital raising activities and are excited about the opportunity to build an even stronger and more recognizable consumer brand in residential energy services," Sunrun said in a statement announcing the acquisition.
The move comes as the coronavirus epidemic constrained the residential solar market, leading to supply chain shortages in March and April, and lower consumer demand due to the expected recession conditions.
Both companies had reported a net loss in their first quarter: Vivint at an adjusted loss of $1.01 per share, Sunrun at $0.23 per share. Sunrun had also laid off about 100 workers and furloughed others due to the coronavirus outbreak.