* Paramount is majority-owned by Guthy Renker LLC
* Paramount CEO to oversee SolarCity's sales and marketing
* Company raises 2013 outlook for panel installation
(Adds CEO comments, details of panel installation forecast,
company background, stock price)
By Nichola Groom
LOS ANGELES, Aug 13 SolarCity Corp said
on Tuesday it will buy direct-marketing solar company Paramount
Solar for about $120 million in a deal intended to help cut the
cost of acquiring new customers.
Paramount Solar is majority-owned by Guthy Renker LLC, the
direct marketing company best-known for its Proactiv skin care
line. Guthy Renker's chief executive, Ben Van de Bunt, is
expected to join SolarCity's board of directors later this year.
The planned acquisition, expected to be completed in
September, will give SolarCity a foothold in the
direct-to-consumer or over-the-phone sales market.
SolarCity's stock has been on a tear since its initial
public offering at $8 a share in December. It
was up 1.3 percent at $38.60 near midday on Tuesday. The company
has grown rapidly thanks to a business model that allows
homeowners to pay a monthly fee to lease solar panels,
eliminating the need for a large up-front investment.
But SolarCity is also under pressure from investors to cut
costs, which have escalated due to its dramatic growth. Unlike
SolarCity, which sells its systems through a vast network of
sales agents, Paramount relies on sales direct to consumers
through a call center.
"It's very simple for a customer to make a decision over the
phone, versus a long drawn-out complicated process," Paramount
CEO Hayes Barnard said in interview. Barnard will join SolarCity
as chief revenue officer, overseeing the company's sales and
Adding Paramount's remote selling expertise will help
SolarCity reduce the overall amount it pays to attract new
customers, said Lyndon Rive, SolarCity's CEO.
"You need to be the best at every vertical," he said in an
interview. "You need to be the best at field sales marketing,
you need to be the best at retail and partnerships, and then you
need to be the best at remote virtual selling. You need all
SolarCity slightly raised its outlook for how many panels it
plans to install in 2013, also known as the deployment outlook,
to 278 megawatts from 270 MW. It said the deal will have a more
significant impact in 2014.
The company is already Paramount's biggest sales partner,
according to Barnard.
With the expansion of its footprint into virtual sales, San
Mateo, California-based SolarCity expects to reach a goal of
having 1 million customers by July 4, 2018, Rive said. Today it
has more than 68,000 customers.
SolarCity will pay $116.3 million in stock for Paramount and
the remainder in cash.
SolarCity is backed by entrepreneur and Tesla Motors CEO
(Editing by Nick Zieminski and Matthew Lewis)