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 The cash-and-stock deal, worth $2.2. billion when it was forged last
July, had faced criticism from hedge funds and other investors as
SunEdison's finances and share price weakened.
SunEdison shares - which were trading at $31.56 when the deal was
set - were up 28 percent at $2.43 in premarket trading, while
Vivint's were down 6.9 percent at $4.85.
Vivint said it intended to "seek all legal remedies available" as a
result of the "willful breach" of the merger agreement by SunEdison.
SunEdison said in December it expected the Vivint deal to close in
the first quarter of 2016.
Like other solar companies, SunEdison has been hit by the drop in
oil prices but it has also faced criticism for trying to grow too
quickly through acquisitions that it could not afford.
SunEdison, which has a market value of about $600 million, had
long-term debt of $9.77 billion as of Sept. 30. The company said on
March 1 that it would delay filing its annual report, citing an
internal investigation into its financial position.
As part of the Vivint deal, SunEdison "yieldco" TerraForm Power Inc
<TERP.O> had agreed to buy Vivint's rooftop solar portfolio for $799
million, revised down from $922 million under pressure from activist
hedge fund Appaloosa Management.
Appaloosa Chief Executive David Tepper had called on TerraForm to
"resist" the Vivint deal, saying it was a departure from TerraForm's
business model and would put shareholders at risk.
Appaloosa has also sued SunEdison to try to prevent TerraForm Power
from buying assets from Vivint, which is controlled by Blackstone
Group LP.
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David Einhorn's Greenlight Capital said in January it was in talks
with SunEdison regarding a board seat and that it was pressing for
asset sales or even the sale of the company itself.
Vivint's decision to terminate the deal came days after SunEdison
settled disputes and agreed to pay damages related to its
termination of a deal to buy Latin America Power Holding, an owner
of wind and hydropower projects in Chile and Peru.
Up to Monday's close, SunEdison's stock had lost 94 percent of its
value since the Vivint deal was announced, while Vivint's stock had
fallen 52 percent.
(Reporting by Amrutha Gayathri in Bengaluru; Editing by Ted Kerr)
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