LEHI — Vivint Solar is being gobbled up by one of its biggest rivals.
In a deal announced late Monday, the Lehi-based solar energy company is being acquired by Sunrun Inc. in an all-stock deal valued to be around $3.2 billion.
The deal brings a new consolidation to the U.S. solar sector at a time where cost saving is needed. It’s a growing market, but one that, like many others, has been upended by the coronavirus pandemic. The companies say the deal would provide an estimated $90 million savings in operation costs.
The two companies have had similar business models and visions. Both Sunrun and Vivint Solar install rooftop solar across much of the country through leases and direct sales.
The combined companies will now have a customer base pushing 500,000.
"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,” Sunrun’s CEO and co-founder Lynn Jurich said in a news release. “We admire Vivint Solar and its employees, and look forward to working together as we integrate the two companies.”
Jurich specifically noted the addition of Vivint Solar’s sales channel that will allow Sunrun to reach more homes. Door-to-door sales have been a key component of the Vivint brand, of which Vivint Solar is an offshoot since it was founded in 1999 as a home security company.
"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," Jurich said.
According to the news release, residential solar has reached only 3% penetration in the United States despite both companies, leaving room for much growth.
Both of the companies' boards have approved the deal, but shareholders still need to sign off. It is expected to be completed by the end of the year.
The stock reaction to the deal has been strong with Vivint Solar stock up 38% midday Tuesday while Sunrun was trading up 22%. Early Tuesday, Sunrun stock was up over 25%, marking its largest-ever one-day percentage increase.
“Vivint Solar and Sunrun have long shared a common goal of bringing clean, affordable, resilient energy to homeowners,” Bywater said in a statement. “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.”