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.
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