Sunworks Inc. (SUNW) stock declined by 2.93% at the last trading close contrary to which the SUNW stock shows a rise by 7.18% in the after-hour trading after Sunworks announced that they have signed an agreement with Solcius, details of which we will discuss below. Sunworks is a leading manufacturer of high-efficiency solar power systems. Sunworks is dedicated to high-quality management practices that go above and beyond industry expectations while adhering to its core values of ethics and protection. Solcius LLC is a full-service residential solar system provider dedicated to lowering carbon emissions and rising energy bill savings for thousands of environmentally and financially aware customers nationwide.
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What is happening?
Sunworks today announced the signing of a definitive agreement in which a Sunworks subsidiary would purchase Solcius in an all-cash deal valued at $51.8 million on a cash-free and debt-free basis. The deal establishes a global solar power company with operations in 12 states. In calendar year 2020, the combined company reported net sales of approximately $131.5 million. After capturing financial, organizational, and cost synergies, Sunworks expects the merged business to be profitable in the first full year after integration.
Highlights of the agreement
- The merger creates a national leader in the rapidly expanding residential market, with substantial competitive synergies.
- Utilizes Solcius’ experience and infrastructure to rapidly and cost-effectively develop a presence in new markets for residential solar installation.
- Gives Sunworks a national presence, allowing for the careful and rapid expansion of rural, commercial, manufacturing, and public works service offerings in new areas.
- Improves size, with pro forma sales of approximately $131.5 million for the entire calendar year 2020 if the companies were combined, and a combined inventory of $81.4 million if the companies were combined as of December 31, 2020.
- Better access to manufacturers, vendors, and financial partners, as well as marketing and customer growth opportunities, due to increased economies of scale.
- Once integration synergies are introduced, the deal is projected to be accretive to earnings and drive cash flow