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SunEdison to Acquire Vivint Solar for $2.2 billion

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Sep. 15 2015, Updated 2:05 p.m. ET

Proposed acquisition

On July 20, 2015, SunEdison (SUNE) announced that it has entered into an agreement to acquire Vivint Solar (VSLR) for $2.2 billion in cash and stock. SunEdison will get access to VSLR’s 523 MW operational rooftop solar portfolio along with ongoing and future projects.  SUNE will drop down the 523 MW operational portfolio to TerraForm Power (TERP) for $922 million in cash.

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SunEdison’s homecoming

SunEdison (SUNE) entered the residential and commercial rooftop solar market in 2013 with the acquisition of EchoFirst. Last year, the company acquired Energy Matter to scale up its residential and commercial offerings. The company currently has 121 MW of residential and commercial assets. By acquiring VSLR, SunEdison is pushing deep into the high-growth US residential solar market. VSLR is one of the top players in the residential solar market, which is dominated by SunPower (SPWR) and SolarCity (SCTY).

Diversification benefit

With VSLR’s acquisition, SUNE has also achieved greater diversification in its portfolio. SunEdison has already diversified into wind and hydro power from its traditional strength in executing utility-scale solar power plants. Although SUNE has been operating in the residential and commercial solar space since 2013, the VSLR acquisition gives the company scale to boast of.

FirstSolar’s (FSLR) management, on the other hand, has categorically said that the utility scale solar sector remains the company’s focus area and the company won’t enter the residential solar (TAN) market directly. FirstSolar (FSLR) and SunPower’s (SPWR) joint yieldco, 8point3 Energy, has a residential portfolio that’s dropped down from SPWR.

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