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M&A and Joint Venture in the Solar Industry picking up pace as Stocks trade at Rock Bottom Valuation

Sneha Shah wrote on 30 May, 2010
Concentrated Solar Thermal,Solar Photovoltaic Energy,Sunpower
1 Comment

Acquisitions and Alliances have shown an increasing trend in the Concentrated Solar Thermal (CSP) segment in contrast with the Solar Photovoltaic (PV) segment. However the conditions have been changing in the PV segment making M&A and JVs increasingly attractive in this segment as well.The main factors that are contributing to this rising M&A and Acquisition trend in the Solar PV space are

  1. Continuous Price Pressure with Solar Module prices decreasing by more than 50% in the last 2 years
  2. Strained Balance Sheets due to massive capex spends  as industry grows at a CAGR of more than 50%
  3. Rock bottom valuations and stock prices making it easy for an acquirer to pick companies on the cheap

Recent Acquisitions,Stake Sales and Alliances

The trend has been more towards alliances and stake sales rather than acquisitions.There have been no big bang acquisitions yet in the Solar PV space.However there has been an increasing trend towards alliances which ultimately might morph into acquisitions as non-solar Companies get more comfortable with this relatively new industry.Here are some recent examples of consolidation in the Solar PV segment

  1. LCD company AUO and Sunpower signed up for a 50:50 JV to build a  billion dollar plant in Malaysia
  2. Foundry Giant TSMC buys 20% stake in Motech , the oldest Solar PV company in Asia for $193 million.
  3. Chinese Solar PV Company Solarfun buys the Solar Cell making operations of SMIC

Solar Companies trading at Bargain Valuations

The recent European crisis and the resultant Euro depreciation has led to a massive carnage in Solar PV stock prices.Many of these companies are trading at record low valuations making them attractive targets for acquisitions from bigger companies like Samsung,Hyundai who are looking to make an entry into the Green Industry.Sunpower was up more than 20% on the news of the AUO Joint Venture.There exist a number of attractive companies with good technology which are trading at “bankruptcy valuations” potentially making this an exciting sector for “event” oriented investors

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Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in

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