LEHI — In a deal announced late Monday, Utah’s Vivint Solar will be acquired by residential solar competitor Sunrun Inc. in an all-stock deal valued around $3.2 billion.
Investor reaction Tuesday was overwhelmingly positive with Vivint Solar stock up about 38% and Sunrun shares seeing a 23% surge by the end of regular trading.
In a Deseret News interview Tuesday afternoon, Vivint Solar CEO David Bywater said bringing the two companies together “just made logical sense” and noted the relative strengths and weaknesses of each business “complement each other perfectly.” He also noted the combined companies, which will operate under the Sunrun brand, will become the second- or third-largest residential solar provider in the U.S. and likely the fifth largest in the world.
“We’re excited,” Bywater said. “There are few times in your life when you can do a deal that is truly the opportunity to build a ‘best of breed.’”
The combined companies will have a customer base of nearly 500,000 and systems generating a collective 3 gigawatts of power, according to a press release.
Rumors of Vivint Solar being for sale by its private equity owner have been circulating since at least 2017.
The company is an offshoot of an alarm business founded in Provo in 1999 by Todd Pedersen, a former BYU student. That effort was rebranded as Vivint in 2011 and a year later New York City private equity giant Blackstone Group acquired the company for $2 billion. Vivint Solar went public as a spinoff entity in 2014.
Lynn Jurich, co-founder and CEO of San Francisco-based Sunrun, said the merged companies will serve to accelerate the adoption of distributed, home-based energy production systems.
“Americans want clean and resilient energy,” Jurich said in a statement. “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.
“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.”
Door-to-door sales have been part of the underlying driver of Vivint Solar with roots that go back to the launch of APX Alarm Systems in the late ’90s. Pedersen successfully leveraged the door-to-door skills of former missionaries for The Church of Jesus Christ of Latter-day Saints, putting them to work as sales staff in Provo and cities around the country. That long-running expertise in direct sales was, according to Sunrun, a prime attractor in the Vivint Solar acquisition.
“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,” Sunrun wrote in a release. “Our 13 years of experience has shown that a consultative experience from trusted sales advisers 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.”
Bywater said the deal will lead to even broader adoption of the residential solar power systems both companies specialize in.
“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.”
Bywater told the Deseret News that while many details of the deal, which is expected to close by the end of the year, remain to be worked out, in the short term he doesn’t expect changes to Utah-based operations from a staffing standpoint, but future changes will be determined. He noted Vivint Solar had, until the COVID-19 pandemic hit, been on a growth arc.
The combined companies should be well positioned in a solar energy industry that continues to be a bright spot in the U.S. renewable energy portfolio.
According to the Solar Foundation, the sector currently employs almost 250,000 across the country, generates tens of billions in economic activity every year and is projected by the U.S. Energy Information Association to be the fastest growing renewable energy source through 2050. Utah is among the top 10 states in the country in terms of solar energy-related employment with over 7,000 working in the industry.
A report released last month by the Solar Energy Industries Association noted the first quarter of 2020 was largely unaffected by the coronavirus pandemic, but the group expects impacts to new systems installations “to appear beginning in the second quarter.” That report also notes the current volume of total installed solar panel capacity in the U.S. at 81.4 gigawatts, enough to power 15.7 million homes.
Clarification: In an earlier version, Bywater indicating that no staff changes were planned as a result of the acquisition. He later clarified that while no staff changes are in the offing in the short term, that could change after the deal closes.