US fleet electrification and energy efficiency solutions provider XL Fleet Corp (NYSE:XL) has acquired distributed generation (DG) solar systems owner and operator Spruce Power in a deal backing its new strategy to provide subscription-based solutions for rooftop solar, battery storage and EV charging.
XL Fleet paid around USD 58 million (EUR 58m) in cash and also assumed USD 542 million of debt in order to take possession of Spruce Power, the buyer said on Monday. The company was sold by funds managed by HPS Investment Partners LLC.
Houston, Texas-based Spruce Power operates more than 52,000 residential rooftop solar systems and is selling the output under long-term contracts with homeowners across 16 states. In the 12 months through June 30, 2022, it booked USD 83 million in revenues and a net profit of USD 15 million. The company had around 110 full-time workers as of September 1.
XL Fleet carried out the acquisition to support its plan to transform its business and provide greater shareholder value through mergers and acquisitions. According to the buyer, the move will create visibility over revenue streams thanks to the recurring monthly payments coming from Spruce Power’s contracts.
“The combination of Spruce’s existing subscriber-base and proven servicing platform with our capital and small business relationships positions us to take advantage of rapid growth in rooftop solar, energy storage and electric vehicle adoption while creating a path to more predictable revenues, profits and cash flow for our shareholders,” said XL Fleet's chief executive Eric Tech.
Following the purchase of Spruce Power, XL Fleet plans to change its name and introduce a new brand identity to reflect its focus on subscription-based solutions for rooftop solar, energy storage, EV charging and other energy-related products, it said. The combined business will be led by Christian Fong, the current CEO of Spruce Power, from February 15, 2023. Until then, XL Fleet’s current CEO will remain at the helm of the company.
(USD 1.0 = EUR 1.000)
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