Blackstone-backed Vivint Solar pulls plug on $2.2B sale to SunEdison
March 09, 2016
Vivint Solar (NYSE: VSLR), a Blackstone-backed provider of distributed solar energy systems, has terminated a $2.2 billion merger agreement with SunEdison (NYSE: SUNE) citing a breach of contract by the troubled acquirer. Lenders Barclays, Goldman Sachs, Citigroup and UBS reportedly became wary of SunEdison’s deteriorating financial position and inability to provide clarity into its finances. This wariness comes in spite of Blackstone’s commitment in December to provide a $250 million credit facility.
Mega-buyouts have recently faced increased challenges given regulatory hurdles and wide spreads in high-yield credit. KKR was reportedly forced to self-underwrite the $1.2 billion acquisition of home and farm retailer Mills Fleet Farm earlier this year. Additionally, The Carlyle Group renegotiated down the cash portion of a $7.4 billion acquisition of Symantec’s Veritas information management business.
Given SunEdison’s industry, the renewable energy development company’s would-be deal for Vivint Solar may have been especially troubled. SunEdison had made a spate of acquisitions since January 2014, greatly increasing overall leverage just as energy markets declined precipitously. According to the PitchBook Annual M&A Report, energy deals in 2015 saw a YoY decline of 21% in deal value and near 29% in volume. In the same period, energy deals with PE involvement fell even more precipitously, according to the PitchBook Annual U.S. PE Breakdown, with deal value tumbling 52% amid 37% fewer deals.