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Big Oil/Gas (Shell,BP,Total) makes a Solar Energy Comeback – Total acquires Sunpower in biggest recent Solar M&A

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Total the French Oil and Gas Giant has agreed to acquire 60% of the 2nd largest US Solar Energy Company Sunpower of $1.38 billion besides providing it another billion dollars in easy credit for its system business.Note M&A in the Solar Energy Industry has picked up with Korean Chaebol buying up Solarfun and recently Meyer Burger buying Roth & Rau to create the 2nd largest solar equipment producer in the world.Note competition in the solar energy industry has become fierce with the entry of a number of top MNC conglomerates besides a number of thin film startups.Coupled with the decline in European solar subsidies,the situation of high cost solar panel companies has become extremely difficult.Evergreen Solar a small US producer of  solar panels using ribbon technology is facing a cash crunch as its sales have plummeted.Other US and European companies too face difficult times after a stellar 2010 saved many a solar company from bankruptcy.

Big Oil and Gas Companies like Shell and BP have lost marketshare and reduced investments

Note Big Oil and Gas has been slowly been retrenching form the solar energy industry despite initial leadership.Shell which was one of the biggest solar players has become almost non-existent while BP has shut down a number of solar factories outsourcing production to China.BP Solar is still one of the to players in the industry despite falling down the rankings rapidly from a top 10 position 2-3 years ago.Shell has also sold of most of its technology and manufacturing to other companies .Other Oil and Gas companies like Exxon,Valero,Chevron and others have concentrated their energies on related green sectors like algae based biofuels rather than on solar and wind energy.So the move by Total comes as a surprise as it acquires one of the top 15 solar panel companies in the world.Sunpower is being acquired at a cheap price considering its world beating solar cell technology and its massive systems business which has gigawatts of solar projects under development.Note Sunpower makes the highest efficiency solar panels on a commercial scale and recently tied up with AUO.It is the 2nd biggest solar plant installer in the US and has a massive presence in the commercial and government sector.Total said it looked at over 200 companies before buying Sunpower.Note M&A has been strong in the Solar Thermal Industry and has now started picking up in the Solar PV Industry as well.With solar company valuations at a historic low,it makes sense for the larger chemical and energy companies to pick up good companies on the cheap.

Total SA, Europe’s third-biggest oil producer, agreed to buy as much as 60 percent of SunPower Corp. for $1.38 billion, taking advantage of increased global interest in renewable energy.

SunPower, the second-largest U.S. solar panel maker, described the acquisition price of $23.25 a share as a “friendly tender offer” in a statement yesterday after the close of regular trading. SunPower surged $6.08, or 38 percent, to $22.20 at 9:32 a.m. on the Nasdaq Stock Market.The deal for San Jose, California-based SunPower may lead to more solar industry acquisitions as U.S. and European suppliers seek help competing against rival suppliers in Asia, said Kevin Landis, portfolio manager at Sivest Group Inc.“This is exactly what SunPower needed to compete with the Chinese manufacturers that are getting so much support from their government,” Landis said in an interview. “It also allows SunPower to double down on the technology improvements they’ll need to compete in the long run.”Total will also provide SunPower with as much as $1 billion of credit support over the next five years.

Evergreen Solar Warns Of Slowing Demand, Liquidity Woes; Shares Off

Evergreen Solar Inc. (ESLR) said uncertainties about subsidies programs have substantially slowed demand for solar panels this year, a trend that has extended beyond the historically sluggish first quarter.As a result, the solar company said its near-term liquidity has been hurt and it may have to secure additional sources of cash sooner than expected. Evergreen said it will continue to restructure its existing debt.Chief Executive Michael El-Hillow warned the longer-than-expected slowdown, combined with worldwide capacity expansion, has led to a significant increase in solar panel inventory.”While we believe the market for solar panels will continue to show good long-term growth, the near term remains uncertain and we will adjust our production in Wuhan to make certain we can match the market’s demands and at the same time improve our cash-to-cash cycles,” he said.


Abhishek Shah

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