Ehren Goossens and Andrew Herndon New York and San Francisco
The solar equipment industry is beginning a consolidation that is already the biggest in at least two years as plunging prices for photovoltaic systems force weaker companies to team up with competitors or close shop.
Mergers and acquisitions announced so far this year total $3.3 billion (R23.4bn), up 33 percent from the $2.47bn in all of 2010. Evergreen Solar of the US filed for protection from creditors this month and Germany’s Q-Cells said last month that it was open to takeover bids.
Tumbling solar cell prices are provoking deals. A 42 percent drop in prices this year, stemming from tougher Chinese competition and declining solar energy incentives in Europe, contributed to California’s Sunpower and Roth & Rau of Germany agreeing to takeovers. Ascent Solar took a Chinese partner.
“Weaker companies (that) did not get their product costs down to competitive levels are going to disappear,” said analyst Christopher Blansett at JPMorgan. “They’ll be bought up. They’ll go away. There is significantly more supply of solar modules than demand.”
A sell-off in solar stocks has made acquisitions cheaper.
The Bloomberg Industries Global Large Solar index fell 36 percent this year to Monday, compared with a 3.8 percent drop in the Standard & Poor’s 500 index in that period.
The pace of acquisitions is the fastest since 2009, when deals worth $6bn were recorded.
The biggest deals that year involved GCL-Poly Energy, the Chinese maker of polysilicon. That is the raw material used in solar cells, which are combined into panels that convert sunlight into power.
The industry is ripe for consolidation,” said Michael Schostak of Michigan-based Energy Conversion Devices.
Q-Cells, once the world’s largest maker of solar cells, hired investment bank and bankruptcy adviser Houlihan Lokey to look at financing options, it said last week.
“It’s totally feasible that Q-Cells goes under,” said analyst Aaron Chew of Maxim Group. The company’s shares reached a record low on August 10 after forecasting a “three-digit million-euro” loss for the year.
Q-Cells spokeswoman Ina von Spies said the group was “well-positioned” to compete. She said in e-mails on Monday that it had an established brand, an innovative portfolio of solar cells and modules, technological know-how and a strategy to “continuously drive down costs”. Q-Cells “has already led talks with potential partners, which haven’t resulted in an agreement”.
Other German solar companies are struggling. Solon said on August 16 that it would cut 15 percent of its jobs after inventory rose 45 percent in the first quarter to e160 million (R1.6bn) from a year earlier.
Roth & Rau agreed in April to a takeover by Swiss rival Meyer Burger after first-quarter inventory tripled to e97m.
Schostak of Energy Conversion said the most likely takeover targets offered commodity crystalline silicon products and that his company was talking to potential partners about integrating its flexible cells into products from roofing tiles to backpacks. He didn’t name the companies.
Daystar Technologies, a California-based maker of thin-film solar cells, was in talks with potential investors to “provide financing, manufacturing capabilities or other opportunities”, said chief financial officer Chris Lail.
“US solar manufacturing consists of legacy laggards” and innovators that had “stuff so new that it’s not even on the shelves”, Chew said. “The question is, will the shake-out result in consolidation or closures?” – Bloomberg
This is what our dependency on money has created. A financual hardship. Sure China with their cheap labor can produce products cheaper than we do here in America. And its great for the businesse owner's of these company's who live well off ,but not for their workers who live in poverty. Watch "Mardi Gra in China" on YouTube to see what I mean.
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