Deal gives mainland firm a foothold in the world's largest solar cell market
Suntech Power Holdings, the largest Chinese solar-cell maker by market value, has agreed to acquire a Japanese rival for up to US$300 million in an attempt to expand into the world's largest solar power market.
Suntech said yesterday that it would buy two-thirds of MSK Corp for US$107 million in cash by next month.
It will also pay between US$53 million and US$193 million in shares by the end of next year for all or a substantial part of MSK's remaining interest, depending on the Japanese firm's ability to reach a certain unspecified revenue target.
Suntech will seek a one-year bridging loan to fund the transaction. Credit Suisse, which arranged Suntech's New York initial public offering last year, is the sole financial adviser for the mainland company.
MSK, which makes photovoltaic modules that convert sunlight into electricity, had an annual production capacity of about 200 MW last year. It has about 260 employees.
'While Japan is the world's largest single market for [these] modules, it is also one of the most difficult markets for foreign players to enter,' Suntech chairman and chief executive Zhengrong Shi said.
'We anticipate that this acquisition will give Suntech the advantage of MSK's nationwide sales and marketing platform in Japan, which we expect to leverage to grow our market share in this important market.'
Japan accounts for about 53 per cent of the world's production of solar energy, and the country's solar cells and modules output is also the fastest growing, expanding by 48 per cent last year.
The foray into Japan's solar power market came after Suntech received permission to sell its products in the United States, also one of the world's largest solar markets, in early May.
Suntech designs and produces photovoltaic cells and modules for electric power applications for residential, commercial, industrial and public utility customers mainly in Germany, Spain and China.
The high-growth solar energy firm expects net revenue in the second quarter of this year to come in at US$110 million to US$117 million, up 163 per cent to 179 per cent from a year ago.
Suntech also expects total production output to be between 130 MW and 140 MW for the full year.
Its American depositary receipts rose 9.87 US cents on Wednesday, closing at US$28.39.
Shares in its IPO were priced at US$15 each.