Business-minded California residents may be interested to learn that a deal between Vivint and SunEdison was terminated on March 8. Though SunEdison had previously planned to purchase residential solar developer Vivint, the deal fell through due to financing problems. Vivint canceled the $2.2 billion sale to SunEdison and is now reportedly planning to sue the company for breach of contract.
The transaction between Vivint and SunEdison had been controversial before it was canceled. David Tepper, a billionaire hedge fund manager, objected to the deal and sued to cancel it. According to Tepper, the SunEdison-Vivint transaction was only approved because the board of directors had been coerced into agreeing to it. However, it was SunEdison’s financial problems, and not Tepper’s lawsuit, that led to the cancellation of the Vivint deal.
According to reports, Vivint canceled the sale to SunEdison because SunEdison was unable to secure funding. SunEdison was relying on several different banks to provide $300 million in credit that was needed for the Vivint purchase. After SunEdison missed the deadline for its annual 10-K filing, the banks decided to deny SunEdison the credit that was needed for the Vivint purchase.
A merger between two companies can be mutually beneficial if the deal goes smoothly. A company that is considering acquiring a smaller company may want to work with a business attorney during the acquisition process. If there is a contract dispute during or after the acquisition, an attorney may want to see if a negotiated settlement is possible as an alternative to litigation.
Source: Forbes, “Vivint Solar Cancels $2.2 Billion Sale To SunEdison, Claims Breach Of Contract,” Antoine Gara, March 8, 2016