Solar energy player Zeo doubles on deal for merger with Heliogen

Quotes on Zeo Energy, a small-cap provider of residential solar, distributed energy, and energy efficiency solutions, soared almost 120% yesterday, May 29, before giving back 15% in premarket trading today. This came after Zeo announced it would acquire Heliogen, which specializes in renewable energy storage solutions for industrial facilities and data centers. According to the investment bank Noble Capital Markets, this deal marks a strategic shift for Zeo, positioning it as a more vertically integrated energy provider with diversified revenue streams.

Yesterday, Zeo skyrocketed 117% on the Nasdaq to close at $3.43 per share, its highest closing price since January 3, before giving back about 15.5% in premarket trading today, as of this writing.

Earlier in the day yesterday, the company announced an agreement to acquire the smaller player Heliogen. Zeo will buy all outstanding Heliogen shares, while Heliogen shareholders will receive $10 million of Zeo shares, based on a price of about $1.59 apiece, slightly above the closing price of $1.58 per share on Wednesday.

The transaction is expected to close in the third quarter. Both companies’ boards have already approved the deal, but it still requires approval from Heliogen shareholders.

Heliogen provides energy storage solutions mainly for data centers, while Zeo specializes in residential solar energy systems. Together, the two aim to create a clean energy platform spanning residential, commercial, and utility-scale markets, Zeo stated in the press release.

According to Noble Capital Markets, the deal marks a strategic pivot for Zeo, positioning it as a more vertically integrated energy provider with diversified revenue streams. The company aims to streamline corporate overhead, grow market share, and strengthen its balance sheet with Heliogen’s intellectual property and cash, Noble writes. As of the end of 2024, Zeo had $46.9 million in cash and no debt, based on its financials. 

For investors, the combined company represents a chance to gain exposure to the global shift toward decarbonization and distributed energy, Noble points out.

The trend in the industry, Noble adds, is integrated platforms that can deliver end-to-end clean energy solutions, from rooftop solar panels to large-scale grid storage.