Don't let anyone say the stock market lacks a sense of humor.
On Thursday, shares of SunEdison (SUNE) soared 36% during regular trading on news that shareholders of Vivint Solar (VSLR) approved plans to be acquired by SunEdison. Shares continued rallying above 30% after the close as it was revealed a Delaware court denied an injunction filed by David Tepper's Appaloosa Management attempting to block the deal.
"We are gratified that the court denied the injunction and now we look ahead to continuing to navigate current market conditions," SunEdison said in a statement released Thursday evening.
While investors are celebrating the deal, they weren't liking it when it was announced back in July. In the chart below, which was pulled for Thomson Reuters, you can see that while shares of SunEdison are down 92% over the last year, much of that drop occurred just as the Vivint deal was announced in July.
At the time, investors felt SunEdison was biting off more than it could chew and that Vivint's portfolio of residential projects was of inferior credit quality compared to SunEdison's more commercial projects.
To be sure, terms of the Vivint deal were amended in December. Among the changes to the original deal, SunEdison was able to lower the cash amount it was paying to Vivint by $2 a share. While the economics were better, Appaloosa Management, which had a stake in SunEdison's yieldco, TerraForm Power (TERP), took issue with aspects of the proposed deal that would require TerraForm Power to purchase Vivint's projects from SunEdison.
In January, Appaloosa Management filed a complaint against SunEdison alleging it "breached its fiduciary duties to TERP and its minority stockholders."
Shares of TerraForm Power closed up a more modest 2% and are down 5% in after-hours trading.
"This should clear the way for SUNE to acquire VSLR and potentially place the operating assets at TERP instead of holding the assets on their balance sheet (which is very constrained)," Patrick Jobin, an analyst at Credit Suisse, wrote in a note after the announcement. Credit Suisse has a Neutral rating on the company and a price target of $3.
Perhaps the yieldco isn't feeling like a winner?
