South Korean Conglomerate Hanwha subsidiary Hanwha Chemicals has taken a controlling 49.99% stake buying 36 million shares fro m Solarfun at $10.72 (4.6% premium) and the complete shareholding of promoters Good Energies (controls German Q-Cells as well ) and Chairman Mr. Yonghua Lu .Solarfun is the 4th largest Chinese company which has been executing well on a vertical integration strategy.The company has 900 MW of module capacity with ~400-500 MW of wafer and cell capacity.The company has rapidly increased its 2010 marketshare and is trading at trough valuations currently.The Buyout comes at a good time for the Hanwha Group as solar stocks are trading at 2010 P/E of mid single digits due the worries about oversupply in 2011.2010 has proved to be a stellar year with global solar demand estimated to be in the range of 12-14 GW which would be a 80-100% increase from 2009.All the solar companies are sold out with prices increasing due to supply shortage.
South Korean Chaebols putting Big Money into Solar
South Korean Chaebols like LG and Samsung have already started solar manufacturing plants.Even Hyundai is expected to double the production of solar modules in 2011.Hanwha which is the 4th largest conglomerate in South Korea already has a 30 MW solar capacity and is looking to make major investments into Green Energy.This is driven by the South Korean government which has spent huge amounts in Green Subsidies.Hanwha Group through this acquisition becomes the largest solar company in South Korea outdistancing the others at a comparatively small price of $370 million.
Consolidation in the Solar Industry Picking up Pace
M&A activity in the Solar Industry has increased due to rock bottom valuations.Deal activity has increased sharply with AUO-Sunpower and TSMC-Stion being some of the recent partnerships. Solar Thermal Industry has already seen a frenetic phase of acquisitions earlier.The industry is still highly fragmented,but lower ASPs and increased competition makes more consolidation inevitable.This is a net positive for the solar industry as it will lead to increased capex and better technology.
Solarfun Announces Strategic Investment From Hanwha Chemical Corporation and Significant Shareholder Transactions – PR newswire
Solarfun today announced a strategic relationship between the two companies that includes an agreement by Hanwha Chemical to purchase 36,455,089 ordinary shares from the Company at a price of RMB14.51 (US$2.144) per ordinary share, which corresponds to a price of US$10.72 per American Depositary Share. The total proceeds to the Company will be approximately US$78 million.
Hanwha Chemical has also entered into separate agreements to acquire from Good Energies II LP (“Good Energies”) and Yonghua Solar Power Investment Holding Ltd. (“Yonghua”), a company owned by Solarfun’s Chairman, Mr. Yonghua Lu, a total of 120,407,700 Solarfun ordinary shares and 1,281,011 Solarfun American Depositary Shares (“ADS”), representing all of the ordinary shares and ADSs held by them. Following the closing of the purchase of shares and ADSs from the Company, Good Energies and Yonghua and the transactions completed thereby, Hanwha Chemical will own 49.99% of Solarfun’s outstanding shares and hold a 49.99% voting interest in Solarfun.
The senior management team of Solarfun will remain with the Company upon completion of the transactions. It is expected that three designees from Hanwha Chemical will be nominated to serve on the Solarfun Board and that one of the Hanwha Chemical designees will be elected Chairman of the Board. The remaining four members of Solarfun’s Board will remain independent.
South Korea‘s Hanwha Chemical (009830.KS) will acquire a 49.99 percent stake in Chinese photovoltaic (PV) cell maker Solarfun Power Holdings Co (SOLF.O) for 434 billion won ($370 million) to expand into a new business.In a joint statement, Hanwha and Solarfun said Hanwha would pay $10.72 per American Depositary Share, or a 4.6 percent premium to Monday’s closing price.
Hanwha said the deal was also aimed at securing production capacity in the fast-growing Chinese market.
Solarfun CEO Ping Peter Xie said in a statement: “With its substantial financial resources, extensive global relationships and proven expertise in building energy projects, the relationship with Hanwha will be invaluable to Solarfun as we continue to grow our business and penetrate new markets.”Hanwha said the final deal was expected by end-October.