Shoals Agrees To All-Stock Merger With ARRAY, Leaving Its Holders About 65% Of The Combined Company
Shoals CEO Brandon Moss would run the merged company, and ARRAY committed to redeem $317.5 million of preferred stock.
Shoals Technologies Group, which makes the electrical equipment linking solar panels and battery systems to inverters and the grid, agreed Wednesday to merge with solar tracker maker ARRAY Technologies in an all-stock deal. Shoals shareholders would own about 65% of the combined company, and Shoals CEO Brandon Moss would be its chief executive.
A fixed ratio and a 65% stake
Shoals holders will receive 1.6931 ARRAY shares for each Shoals share. That leaves them with about 65% of the combined company's basic shares, or 64.5% fully diluted, and ARRAY holders with the rest. ARRAY is the legal acquirer and becomes the parent.
Reuters valued the deal at about $1.32 billion for Shoals.
The companies expect more than $100 million of added annual adjusted EBITDA synergies within three years of closing. About $20 million of cost savings and about $15 million of cross-selling gains are expected in year one.
Preferred stock cleanup
ARRAY committed to redeem $317.5 million of its Series A Perpetual Preferred Stock. Of that, $161.3 million is due within 90 days of closing at 93% of liquidation preference. The remaining $156.3 million comes at 96% in installments of at least $52 million.
The companies say the redemptions should cut cash distributions by nearly $100 million over five years. After the first redemption, the liquidation preference would be about $348.7 million.
The companies also gave a preliminary, indicative 2027 pro forma outlook for the combined company, including year-one synergies: revenue of $2.2 billion to $2.4 billion and adjusted EBITDA of $410 million to $480 million. They stress it is not a projection of either firm. Pro forma net debt to adjusted EBITDA is 2.6x at year-end 2026, and the companies estimate it falls below 2x by year-end 2027.
Cross-selling and who runs it
Only about 20% of projects the two companies served in 2025 and 2026 used products from both, which the companies call a cross-selling opportunity.
The board will have ten directors: four independent directors from each current board, plus Moss and Chairman Brad Forth. ARRAY CEO Kevin Hostetler becomes a special advisor. Headquarters will be in Albuquerque, New Mexico, and a new name and ticker are coming.
If the deal collapses over a change in board recommendation, Shoals would owe ARRAY a $40.3 million termination fee, and ARRAY would owe Shoals $22.2 million.
The companies expect to close in the first quarter of 2027, after shareholder votes at both firms and regulatory approvals, with proxy materials due by year-end.
Sources
- 8-K Filing — Shoals Technologies Group, Inc. (SHLS) — SEC EDGAR
- Exhibit d130123dex991.htm — Shoals Technologies Group, Inc. 8-K exhibit — SEC EDGAR
- Exhibit d130123dex992.htm — Shoals Technologies Group, Inc. 8-K exhibit — SEC EDGAR
- ARRAY to Buy Shoals in $1.32 Billion All-Stock Deal — Reuters
- Array Technologies, Shoals Technologies to merge in all-stock deal (ARRY:NASDAQ) | Seeking Alpha — seekingalpha.com
- Array, Shoals Shares Rally After Companies Ink Merger — MarketWatch
- ARRAY Technologies and Shoals Technologies Group Announce — globenewswire.com
- Shoals Technologies Group, Inc. Reports Financial Results — globenewswire.com
