On Friday, shares of solar energy companies Sunedison Inc (NYSE:SUNE) and Vivint Solar Inc (NYSE:VSLR) are both soaring after a judge ruled against Appaloosa Management’s David Tepper, who challenged SunEdison’s proposed acquisition of Vivint.
SunEdison announced its plan to acquire Vivint in July of last year, in a deal initially worth over $2.2 billion. SunEdison had planned to transfer part of its acquired assets to TerraForm Power, the company’s yieldco, with TerraForm paying roughly $800 million for 470 megawatts (MW) as part of the overall deal. Mr. Tepper went on to sue SunEdison, claiming this plan would unfairly increase TerraForm’s debt load.
Delaware Chancery Court Judge Andre Bouchard ruled in favor of SunEdison, warding off Tepper’s attempt to halt the company’s planned acquisition of Vivint; Appaloosa Management (they have a 9.5% stake in TerraForm) argued that the transaction would end up benefitting SunEdison more than TerraForm.
According to Bloomberg, Judge Bouchard ruled that the hedge fund could not prove that the merger terms would in any way harm TerraForm shareholders. He warned SunEdison, however, that the company faces “serious questions” regarding the fairness of the purchase.
“The deal’s going to go through at this point,” Michael Morosi, an analyst at Avondale Partners, told Bloomberg. “Now, it’s up to SunEdison to execute. They’re picking up a business that’s been distracted for seven months.”
Vivint shareholders voted overwhelmingly for the merger agreement, with more than 100 million votes for and 100,000 votes against.