SunEdison and Vivant, two of the largest players in the residential solar market, announced this week that the former agreed to purchase the latter for $2.2 billion.  Some of the basic deal terms include:

  • SunEdison will acquire Vivint and will subsequently drop down Vivant’s 523 MW rooftop solar portfolio to its yieldco affiliate TerraForm Power
  • The portfolio is expected to produce an unlevered annual CAFD of $81 million, which would generate a 9.5% 10-year average levered cash-on-cash yield

While acquisitions are often positive indicators for a sector (the news pushed Vivant shares to record highs post-announcement; the broader sector also received a bump from the news), many observers are wondering whether this deal was a one-off linked to a need to feed the TerraForm platform rather than a data point in a trend line.

However, with the step down in the solar investment tax credit looming, it would not be surprising to see M&A activity pick up in 2016 as uncertainty makes opportunistic buyers out of large players with the ability to navigate a frothy market.

More information on the proposed SunEdison/Vivant transaction can be found here.