SunEdison Inc (NYSE: SUNE)
Sunedison is having a relatively strong day in the market despite a recent lawsuit filed against the company by David Tepper’s Appaloosa Management. However, is it possible that the suit may actually be a good thing? Today, we’ll talk about the lawsuit that was filed, whether or not it can actually be a good thing for SUNE, how the market is reacting to the news, and other factors that make SUNE stock a good buy!
Appaloosa Management Sues SUNE
It was announced this morning that Appaloosa Management has made the decision to sue SunEdison as the result of it’s Vivint Solar acquisition. While the lawsuit is not seeking damages, it is seeking to stop SunEdison’s yieldco, TerraForm Power (NASDAQ: TERP), from completing the acquisition of Vivint Solar’s assets. After SUNE acquired Vivint Solar in a deal worth $2.2 billion, TerraForm Power was now expected to purchase Vivint’s residential solar rooftop portfolio in a deal with a $799 million price tag. According to the lawsuit, the Vivint acquisition could close at any time and is not in the best interest of TerraForm Power shareholders.
Is The Lawsuit A Good Thing?
In my opinion, the lawsuit really isn’t such a bad thing. The reality is that SUNE already has plans to acquire the most important aspects of Vivint Solar, the acquisition by TerraForm is a stipulation of the deal, but really isn’t that important to investors. In fact, I agree that this part of the acquisition is not in the best interest of investors. Given the current financial landscape portrayed by the company, the last thing SUNE needs to do is spend another $799 million for the rooftop portfolio. So, considering that the lawsuit is likely to stop this from happening, I believe that it’s actually good news for SUNE, TERP, and the investors of both.
SUNE Is Likely To See Long Run Gains
SUNE has been a punching bag as of late, and really, it shouldn’t be. The reality is that SunEdison is a great company with a great product. The problem is debt. However, it’s important to remember that the debt came as the result of acquisitions that are likely to give SUNE a large percentage of the market share in the solar industry – which is building demand at the moment.
The reality is that the world’s view toward power is changing. More and more, it’s becoming common knowledge that greenhouse gases are the result of burning fossil fuels and are horrible for our environment. In fact, 195 countries recently signed a climate change deal with Paris, stating that they would work to reduce greenhouse gas emissions in their respective countries. This means reducing reliance on fossil fuels is something that all of these countries have agreed to do. Ultimately, this will push demand for solar systems (as well as other renewable energy systems) up. On top of this, the United States recently extended a 30% tax credit for consumers and businesses that install solar systems in their homes or offices. This is likely to further increase demand for SUNE products. While SUNE does have a hurdle or two to get over, things are looking great for the company in the long run outlook.
What Do You Think?
Where do you think SUNE is headed moving forward? Let us know your opinion in the comments below!
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