Vivint Solar Shareholders Approved SunEdison Acquisition, Shares Fall After The Announcement

By Staff Writer

Feb 25, 2016 08:00 AM EST

Vivint Solar Inc. shareholders approved the company's sale to solar energy company SunEdison Inc. The transaction is valued at about $2.2 billion, amid the alleged bankruptcy faced by SunEdison.

The acquisition deal was made after Vivint Solar shareholders, led by Blackstone Group LP, voted regarding the matters. According to Bloomberg, the vote results overwhelmingly approve the sale, with more than 100 million votes in favor and just 101,000 against.

The deal also enclosed the acquisition of assets, whereas SunEdison's TerraForm Power Inc. unit should pay $799 million for Vivint's 470 megawatts of assets. However, on behalf of the TerraForm, Appaloosa Management LP which held a 9.5 percent stake in the unit sued to block that part of the deal, because it benefits SunEdison more than TerraForm. 

The acquisition deal was made amid SunEdison's financial and stocks crisis. Fortune reported that the company's stock has been facing a drop in recent months, which have worsened the financial crisis posed by massive acquisition binge gone wrong. The company then announced its plan to sell its silicon wafer factory in Malaysia, close a silicon factory in Texas, and restructure its operations in Oregon. By doing so, SunEdison will cut 220 jobs and add a charge of $435 million to its fourth quarter earnings.

However, after the announcement, SunEdison's shares sunk even more to $1.49, sliding more than 11 percent. That added to the prolonged fall in the company's shares, which peaked highly last summer at $33.45. After the acquisition binge and falling shares, SunEdison is now almost $11.7 billion in debt, as reported by The Manufacturer. Deal cancellations also added to the company's financial spending as SunEdison walked away from some acquisition deals.

Even though SunEdison backed away from some of its previously planned acquisition, the company was rather firm in its intention to acquire Vivint Solar. Some analysts believe that it is likely that SunEdison expects Vivint Solar to provide a way out of the financial problem and debts. But reports revealed that SunEdison's stock began to slide after the company announced its Vivint Solar acquisition plan, as investors started to be alerted of the big spending.

On an official statement, SunEdison chief executive officer Ahmad Chatila stated that they expect the Vivint Solar transaction to create significant value for the company's stockholders. After the acquisition filing was released following the approval from Vivint's shareholders, Vivint's shares dropped by 2.1 percent to $5.51 at the close in New York. 

Vivint Solar's shareholders agreed to make the acquisition deal with SunEdison for $2.2 billion as a result of the shareholder's vote. SunEdison, which stocks have plummeted over the months, expected this deal to add a value to their ailing financial. 

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