Solar energy systems provider,
), recently completed the acquisition of Paramount Solar, a
subsidiary of Paramount Equity LLC., for $120 million. Out of the
total amount $116.3 million was paid in stock and the remaining
$3.7 million in cash.
Calif.-based Paramount Equity, majority-owned by GuthyRenker
LLC, is the largest direct-to-consumer marketing company.
Paramount Solar inks deals with customers and then directs them
to solar retail service providers like SolarCity to complete the
installation work. Homeowners have the option of either buying a
solar energy system or leasing them for up to 20 years.
Post acquisition, Paramount Equity's CEO, Hayes Barnard, will
become the chief revenue officer of SolarCity.
In recent times, the utilization of solar energy is rising
primarily due to its clean nature and a growing awareness among
the masses regarding its benefits. Also, government incentives
and financing options that help to lower the cost of solar panel
installation have led to an increase in solar business.
In fact, solar power is currently the only viable choice for
residential consumers seeking an environment-friendly power
alternative. Solar power limits the expenses and losses
associated with the transmission and distribution from
large-scale electric plants to end users, unlike other renewable
resources such as hydroelectricity and wind power.
The company said that the acquisition will complement
SolarCity's own sales effort. Paramount uses direct mail, online
ads and radio spots to reach consumers, while SolarCity directly
approaches homeowners to sell their solar services.
Therefore, the acquisition will help SolarCity to develop and
offer its systems directly to consumers and thereby further
increase its already large customer base. Currently, the company
has more than 68,000 customers and expects the acquisition to
increase its customer base to 1 million customers by Jul
The acquisition will also help SolarCity to better compete
with other energy producers like
NRG Energy, Inc.
The company stated that the acquisition will have a more
significant impact in 2014. For 2013, the company raised its
installation forecast to 278 megawatts (MWs) from 270 MWs, taking
into account the signed contracts that Paramount will bring.
SolarCity is a leading service solar provider with more than
3,300 employees, 68,000 customers and more than 400 MWs deployed.
The company plays to its strength by providing renewable power at
a lower rate than the grid price to residential and commercial
markets in the U.S.
During the recently reported second quarter, the company's
residential megawatts deployed increased 144%; cumulative energy
contracts signed and outstanding increased 105% and cumulative
customers increased 97% from the year-ago quarter.
SolarCity carries a Zacks Rank #3 (Hold).
EDISON INTL (EIX): Free Stock Analysis Report
NRG ENERGY INC (NRG): Free Stock Analysis
SOLARCITY CORP (SCTY): Free Stock Analysis
SUNEDISON INC (SUNE): Free Stock Analysis
To read this article on Zacks.com click here.