SunEdison (NYSE:SUNE) plans to acquire Vivint Solar (NYSE:VSLR) have ended abruptly as Vivint Solar has decided to withdraw from the contract on the grounds of material breach of the terms of the merger as SUNE failed to furnish the requirements present therein, before the provided deadline of February 26. The company has been targeted by a host of lawsuits for exploiting its partner companies, Terraform Power and Terraform Global, using undue influence and entering contracts detrimental to their progress. Reportedly, the company is also under an internal audit since the end of December 2015, and has been linked by the experts as one of the reasons for delayed 10-k filing. SUNE’s lenders also walked on the deal citing the lack and delay of recent financial statements as violation of the terms of loan agreement.
FBR Capital, however, has a different take on things as it believes the termination of VSLR acquisition is a step in the right direction. The analyst Carter Driscoll believes that not only the price of $1.85 billion down from $2.2 billion in December, was too high, but the quality of assets at Vivint was not satisfactory. Furthermore, Vivint has been declining at a rapid rate and the company has lowered the guidance twice. To summarize the termination should prove to be healthy for SUNE given the company’s liquidity situation combined with overvaluation of the assets. As per analysts estimate, SUNE should end the quarter with $472 million in cash.
The analyst maintained an Outperform rating on the stock and a price target of $7. The analyst opinion on the stock suggests one Strong Buy and a Hold rating as the legal scuffles lead to a horde of analysts terminating coverage of the stock.