Sunrun (NASDAQ: RUN), a leading provider of residential solar,
battery storage and energy services, and Vivint Solar (NYSE: VSLR),
a leading full-service residential solar provider in the United
States, today announced the companies have entered into a
definitive agreement under which Sunrun will acquire Vivint Solar
in an all-stock transaction, pursuant to which each share of Vivint
Solar common stock will be exchanged for 0.55 shares of Sunrun
common stock, representing a combined Enterprise Value of $9.2
billion based on the closing price of Sunrun’s shares on July 6,
2020. Vivint Solar stockholders are expected to own approximately
36% and Sunrun stockholders are expected to own approximately 64%
of the fully diluted shares of the combined company. The exchange
ratio implies a 10% premium for Vivint Solar shares based on
closing prices on July 6, 2020, and a 15% premium to the exchange
ratio implied by the three month volume weighted average price of
Vivint Solar and Sunrun shares.
“Americans want clean and resilient energy. Vivint Solar adds an
important and high-quality sales channel that enables our combined
company to reach more households and raise awareness about the
benefits of home solar and batteries,” said Lynn Jurich, Sunrun’s
Chief Executive Officer and co-founder. "This transaction will
increase our scale and grow our energy services network to help
replace centralized, polluting power plants and accelerate the
transition to a 100% clean energy future. We admire Vivint Solar
and its employees, and look forward to working together as we
integrate the two companies.”
David Bywater, Chief Executive Officer of Vivint Solar, added,
“Vivint Solar and Sunrun have long shared a common goal of bringing
clean, affordable, resilient energy to homeowners. Joining forces
with Sunrun will allow us to reach a broader set of customers and
accelerate the pace of clean energy adoption and grid
modernization. We believe this transaction will create value for
our customers, our shareholders, and our partners.”
A Shared Mission to Create a Planet Run by the
Sun
Sunrun and Vivint Solar share a mission to create a planet run
by the sun. Together, we can empower more families to take control
of their energy future by increasing customer choice in how they
create and consume power.
There is an urgent need to decarbonize our energy system.
Extreme weather due to climate change is increasing, putting
immense strain on our energy system. Fossil fuel power plants are
responsible for more than 30% of all carbon pollution across the
country. Sunrun will be a meaningful contributor to a fully
renewable and electrified energy system. Our growing fleet of solar
homes and batteries will be networked to provide greater benefits
to the grid and energy consumers. Generating energy at the
point it is used reduces the need for dirty energy being produced
far away that is increasingly expensive to transmit. Our customers
have already and will continue to help shut down inefficient
carbon-producing power plants.
Our combined customer base of nearly 500,000 creates a leading
owner of solar assets globally, with over 3 gigawatts of solar
assets on the balance sheet. Yet, residential solar has reached
only 3% penetration in the United States today and the runway for
growth remains massive.
Sunrun has committed to leading the solar industry in diversity
and inclusion efforts, career development, and employee benefits.
As part of a broader, more diversified company, we will be able to
offer employees even more opportunities and solidify our position
as the best place to work in the solar industry.
Strategic Rationale
This is a transformational opportunity to generate consumer and
shareholder value, realize annual cost synergies and bring cleaner,
affordable energy to more homes. It establishes Sunrun as a leading
home solar and energy services company across the United States,
bringing greater opportunities for consumers to save money on their
electric bills and decrease dependence on fossil fuels.
Residential solar has reached only 3% penetration in the United
States today and yet surveys show nearly 9 out of 10 people in the
United States favor expanding the use of solar power. The
acquisition of Vivint Solar adds a complementary direct-to-home
sales channel to Sunrun’s platform, increasing our reach and
capabilities in a growing market. Our thirteen years of experience
has shown that a consultative experience from trusted sales
advisors is important to educate customers of the merits of solar
energy. Vivint Solar’s highly trained, consultative field sales
experts will be an important part of the combined platform and will
serve as critical ambassadors for consumers to learn the benefits
of solar energy.
Like Sunrun, Vivint Solar has adapted to the current
environment, accelerating digital lead generation efforts and
providing a contact-less selling and installation experience in
most instances. This transition has resulted in improvements for
both companies, including setting the foundation for structural
cost reductions and improved customer experience.
We expect to deliver meaningful cost synergies, estimated at $90
million on an annual basis. We see opportunities across the entire
cost base, including consolidating and optimizing our branch
footprint, reducing redundant spending on technology systems,
scaling our proprietary racking technology, as well as improving
sourcing capabilities within our supply chains. There are also
opportunities to realize scale benefits from shared corporate
functions including accounting, human resources, legal, and
policy.
We expect additional revenue synergies to generate enhanced
value creation for our customers and shareholders from a larger
base of solar assets. We expect to be able to offer batteries to
the combined base of solar customers. A larger footprint of solar
and battery assets also increases the value of what we bring to our
grid services partnerships and strengthens our ability to deliver
considerable value in that business. 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.
Benefits for Customers
Most energy consumers are currently beholden to a single power
company that provides electricity to them based on their household
location. As a benefit of this combination, Sunrun’s increased
scale, operating efficiency and combined research and development
(R&D) efforts will enable the company to even further
accelerate the adoption of renewable energy and give households
more control over their energy future.
A lower cost structure from greater scale can open more markets
and allow lower pricing for customers, accelerating the transition
away from polluting fossil fuels. It will also give our customers
access to better, more affordable products and services. Lastly,
combining R&D resources and focusing efforts will allow us to
accelerate the offering of advanced solutions, such as virtual
power plants and other energy services programs, to more customers
in more markets.
Transaction Details
Under the terms of the definitive transaction agreement, each
share of Vivint Solar common stock issued and outstanding
immediately prior to the effective time of the merger will be
converted automatically into the right to receive 0.55 shares of
Sunrun common stock.
The Board of Directors of Sunrun and Vivint Solar have each
unanimously voted in favor of the definitive transaction
agreement.
The acquisition of Vivint Solar is expected to be completed
during the fourth quarter of 2020, subject to approval by Vivint
Solar and Sunrun stockholders, regulatory approvals and other
customary closing conditions.
Sunrun’s Board of Directors will be expanded by adding 2
directors, one of which is expected to be Vivint Solar’s CEO, David
Bywater.
Support Agreements have been obtained from both companies’
largest stockholders, 313 Acquisition LLC (Blackstone affiliate)
and Tiger Global, to vote their respective shares in favor of the
merger and the share issuance, respectively.
In addition, 313 Acquisition LLC (Blackstone affiliate) has
agreed to lock up 50% of shares obtained as a result of the
acquisition for 60 days following closing and the remaining 50% for
120 days. Sales are allowed to occur during these periods subject
to certain conditions.
Advisors
Credit Suisse Securities (USA) LLC is serving as the exclusive
financial advisor to Sunrun and Cooley LLP and Axinn, Veltrop &
Harkrider LLP are serving as legal counsel. Morgan Stanley
& Co. LLC is serving as the lead financial advisor to Vivint
Solar, BofA Securities, Inc. is serving as a financial
advisor to Vivint Solar and Simpson Thacher & Bartlett LLP and
Wilson Sonsini Goodrich & Rosati are serving as legal
counsel.
Management Conference Call Information
Sunrun and Vivint Solar are hosting a joint conference call for
analysts, investors and media to discuss the definitive transaction
agreement at 8:30 a.m. Eastern time on Tuesday, July 7, 2020. A
live audio webcast of the conference call along with supplemental
information will be accessible on the “Investor Relations” section
of Sunrun’s website at https://investors.sunrun.com in addition to
Vivint Solar’s website at http://investors.vivintsolar.com. The
conference call can also be accessed live over the phone by dialing
877-485-3106 (toll-free) or 201-689-8575 (international). An audio
replay will be available following the call on the Sunrun Investor
Relations website for approximately one month.
About Sunrun
Sunrun Inc. (Nasdaq: RUN) is the nation’s leading home solar,
battery storage, and energy services company. Founded in 2007,
Sunrun pioneered home solar service plans to make local clean
energy more accessible to everyone for little to no upfront cost.
Sunrun’s innovative home battery solution, Brightbox, brings
families affordable, resilient, and reliable energy. The company
can also manage and share stored solar energy from the batteries to
provide benefits to households, utilities, and the electric grid
while reducing our reliance on polluting energy sources. For more
information, please visit www.sunrun.com.
About Vivint Solar
Vivint Solar, Inc. (NYSE: VSLR) is a leading full-service
residential solar provider in the United States. With the help of
Vivint Solar, homeowners can power their homes with clean,
renewable energy, typically achieving significant financial savings
over time. Vivint Solar designs and installs solar energy systems
for homeowners and offers monitoring and maintenance services. In
addition to being able to purchase a solar energy system outright,
homeowners may benefit from Vivint Solar’s affordable, flexible
financing options, including power purchase agreements, or lease
agreements, where available. Vivint Solar also offers solar plus
storage systems with LG Chem home batteries and electric vehicle
chargers with ChargePoint Home. For more information, visit
www.vivintsolar.com or follow @VivintSolar on Twitter.
Forward-Looking Statements
This communication contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 including, but not limited to, statements based
upon or relating to Sunrun Inc.’s, a Delaware corporation (“Sunrun)
and Vivint Solar, Inc.’s, a Delaware corporation (“Vivint Solar”)
expectations or predictions of future financial or business
performance or conditions. Forward-looking statements generally
relate to future events or future financial or operating
performance. In some cases, you can identify forward-looking
statements by terms such as “may,” “will,” “should,” “would,”
“expects,” “plans,” “anticipates,” “could,” “intends,” “target,”
“projects,” “contemplates,” “believes,” “estimates,” “predicts,”
“potential,” “will be,” “will likely result” or “continue” or the
negative of these words or other similar terms or expressions that
concern our expectations, strategy, plans or intentions.
Forward-looking statements may include, but are not limited to,
statements concerning the expected benefits of the transaction;
cost synergies and opportunities resulting from the transaction;
Sunrun’s leadership position in the industry; the availability of
rebates, tax credits and other financial incentives including solar
renewable energy certificates, or SRECs, and federal and state
incentives; regulations and policies related to net metering and
interconnection limits or caps and decreases to federal solar tax
credits; determinations by the Internal Revenue Service of the fair
market value of Sunrun’s and Vivint Solar’s solar energy systems;
changes in regulations, tariffs and other trade barriers and tax
policy; the retail price of utility-generated electricity or
electricity from other energy sources; federal, state and local
regulations and policies governing the electric utility industry
and developments or changes with respect to such regulations and
policies; the ability of Sunrun and Vivint Solar to manage their
supply chains (including the availability and price of solar panels
and other system components and raw materials) and distribution
channels and the impact of natural disasters and other events
beyond their control; the ability of Sunrun and Vivint Solar and
their industry to manage recent and future growth, product offering
mix, and costs (including, but not limited to, equipment costs)
effectively, including attracting, training and retaining sales
personnel and solar energy system installers; Sunrun’s and Vivint
Solar’s strategic partnerships and expected benefits of such
partnerships; the sufficiency of Sunrun’s and Vivint Solar’s cash,
investment fund commitments and available borrowings to meet
anticipated cash needs; the need and ability of Sunrun and Vivint
Solar to raise capital, refinance existing debt and finance their
respective obligations and solar energy systems from new and
existing investors; the potential impact of interest rates on
Sunrun’s and Vivint Solar’s interest expense; the course and
outcome of litigation and investigations and the ability of Sunrun
and Vivint Solar to consummate the transactions contemplated by the
definitive transaction agreement in a timely manner or at all.
These statements are not guarantees of future performance; they
reflect Sunrun’s and Vivint Solar’s current views with respect to
future events and are based on assumptions and estimates and
subject to known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements to be
materially different from expectations or results projected or
implied by forward-looking statements. These risks include, but are
not limited to: the occurrence of any event, change or other
circumstances that could give rise to the termination of the
definitive transaction agreement or the failure to satisfy the
closing conditions; the possibility that the consummation of the
proposed transactions is delayed or does not occur, including the
failure of the parties’ stockholders to approve the proposed
transactions; uncertainty regarding the timing of the receipt of
required regulatory approvals for the merger and the possibility
that the parties may be required to accept conditions that could
reduce or eliminate the anticipated benefits of the merger as a
condition to obtaining regulatory approvals or that the required
regulatory approvals might not be obtained at all; the outcome of
any legal proceedings that have been or may be instituted against
the parties or others following announcement of the transactions
contemplated by the definitive transaction agreement; challenges,
disruptions and costs of closing, integrating and achieving
anticipated synergies, or that such synergies will take longer to
realize than expected; risks that the merger and other transactions
contemplated by the definitive transaction agreement disrupt
current plans and operations that may harm the parties’ businesses;
the amount of any costs, fees, expenses, impairments and charges
related to the merger; uncertainty as to the effects of the
announcement or pendency of the merger on the market price of the
parties’ respective common stock and/or on their respective
financial performance; uncertainty as to the long-term value of
Sunrun’s and Vivint Solar’s common stock; the ability of Sunrun and
Vivint Solar to raise capital from third parties to grow their
business; any rise in interest rates which would increase the cost
of capital; the ability to meet covenants in investment funds and
debt facilities; the potential inaccuracy of the assumptions
employed in calculating operating metrics; the failure of the
energy industry to develop to the size or at the rate Sunrun and
Vivint Solar expect; and the inability of Sunrun and Vivint Solar
to finance their solar service offerings to customers on an
economically viable basis. These risks and uncertainties may be
amplified by the ongoing COVID-19 pandemic, which has caused
significant economic uncertainty and negative impacts on capital
and credit markets. The extent to which the COVID-19 pandemic
impacts Sunrun’s and Vivint Solar’s businesses, operations, and
financial results, including the duration and magnitude of such
effects, will depend on numerous factors, many of which are
unpredictable, including, but not limited to, the duration and
spread of the pandemic, its severity, the actions to contain the
pandemic or treat its impact, and how quickly and to what extent
normal economic and operating conditions can resume.
Any financial projections in this filing are
forward-looking statements that are based on assumptions that are
inherently subject to significant uncertainties and contingencies,
many of which are beyond Sunrun’s and Vivint Solar’s control. While
all projections are necessarily speculative, Sunrun and Vivint
Solar believe that the preparation of prospective financial
information involves increasingly higher levels of uncertainty the
further out the projection extends from the date of preparation.
The assumptions and estimates underlying the projected results are
inherently uncertain and are subject to a wide variety of
significant business, economic and competitive risks and
uncertainties that could cause actual results to differ materially
from those contained in the projections. The inclusion of
projections in this filing should not be regarded as an indication
that Sunrun and Vivint Solar, or their representatives, considered
or consider the projections to be a reliable prediction of future
events.
Annualized, pro forma, projected and estimated
numbers are used for illustrative purpose only, are not forecasts
and may not reflect actual results.
The foregoing review of important factors should
not be construed as exhaustive and should be read in conjunction
with the other cautionary statements that are included herein and
elsewhere, including the risk factors included in Sunrun’s and
Vivint Solar’s most recent reports on Form 10-K, Form 10-Q, Form
8-K and other documents on file with the United States Securities
and Exchange Commission (“SEC”). These forward-looking statements
represent estimates and assumptions only as of the date made.
Unless required by federal securities laws, Sunrun and Vivint Solar
assume no obligation to update any of these forward-looking
statements, or to update the reasons actual results could differ
materially from those anticipated, to reflect circumstances or
events that occur after the statements are made. Given these
uncertainties, investors should not place undue reliance on these
forward-looking statements. Investors should read this document
with the understanding that Sunrun’s and Vivint Solar’s actual
future results may be materially different from what Sunrun and
Vivint Solar expect. Sunrun and Vivint Solar qualify all of their
forward-looking statements by these cautionary statements.
Additional Information and Where to Find
It
In connection with the proposed merger, Sunrun
intends to file with the SEC a registration statement on Form S-4,
which will include a document that serves as a prospectus of Sunrun
and a joint proxy statement of Sunrun and Vivint Solar (the “joint
proxy statement/prospectus”). After the registration statement has
been declared effective by the SEC, the joint proxy
statement/prospectus will be delivered to stockholders of Sunrun
and Vivint Solar. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION,
SECURITY HOLDERS OF SUNRUN AND VIVINT SOLAR ARE URGED TO READ THE
JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND
SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE MERGER
THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.
Investors and security holders will be able to obtain copies of the
joint proxy statement/prospectus (when available) and other
documents filed by Sunrun and Vivint Solar with the SEC, without
charge, through the website maintained by the SEC at
http://www.sec.gov. Copies of documents filed with the SEC by
Sunrun will be made available free of charge on Sunrun’s website at
http://investors.sunrun.com/ under the heading “Filings &
Financials” and then under the subheading “SEC Filings.” Copies of
documents filed with the SEC by Vivint Solar will be made available
free of charge on Vivint Solar’s website at
http://investors.vivintsolar.com/ under the link “Financial
Information” and then under the heading “SEC Filings.”
Participants in the
Solicitation
Sunrun and Vivint Solar and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the holders of Sunrun common
stock and Vivint Solar common stock in respect of the proposed
transaction. Information about Sunrun’s directors and executive
officers is set forth in Sunrun’s Form 10-K for the year ended
December 31, 2019 and the proxy statement for Sunrun’s 2020 Annual
Meeting of Stockholders, which were filed with the SEC on February
27, 2020 and April 17, 2020, respectively. Information about Vivint
Solar’s directors and executive officers is set forth in Vivint
Solar’s Form 10-K for the year ended December 31, 2019 and the
proxy statement for Vivint Solar’s 2020 Annual Meeting of
Stockholders, which were filed with the SEC on March 10, 2020 and
April 24, 2020, respectively. Stockholders may obtain additional
information regarding the interests of such participants by reading
the registration statement and the joint proxy statement/prospectus
and other relevant materials to be filed with the SEC regarding the
proposed merger when they become available. Investors should read
the joint proxy statement/prospectus carefully when it becomes
available before making any voting or investment decisions.
No Offer or Solicitation
This communication shall not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offering of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Contacts
Investor & Analyst Contacts: Patrick JobinSunrunSVP, Finance
& Investor Relationsinvestors@sunrun.com415-373-5206 Rob
KainVivint SolarVP, Investor
Relationsir@vivintsolar.com855-842-1844 |
Press & Media Contacts: Andrew NewboldSunrunDirector of
Communicationspress@sunrun.com816-516-5809 Wyatt SemanekVivint
SolarPublic Relations Managerpr@vivintsolar.com385-202-6577 |
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