Hanwha
SolarOne Co., Ltd. ("SolarOne") HSOL, Hanwha Solar Holdings Co.,
Ltd. ("HSH") and Hanwha Q CELLS Investment Co., Ltd. ("Q CELLS") announced
today a definitive share purchase agreement to create a new global leader in
solar power. The combined business will be the largest manufacturer of solar
cells with capacity of 3.28 gigawatts and will have a broader international
footprint covering the largest and fastest-growing solar markets in the world.
Under the terms of the agreement, SolarOne will acquire 100% of the
outstanding share capital of Q CELLS from its sole shareholder, HSH, in an
all-stock transaction with an implied enterprise value of the combined company
at approximately $2.0 billion based on the closing price of SolarOne's
American depositary shares (each of which represents five ordinary shares of
SolarOne) as quoted by NASDAQ on December 5, 2014 (the last trading day prior
to this announcement). The transaction was approved by the board of directors
of both companies and is expected to close in the first quarter of 2015,
subject to shareholder and regulatory approvals.
Mr. Seongwoo Nam, chief executive officer of SolarOne, said, "The combination
of SolarOne and Q CELLS creates a formidable global leader that is well
positioned for long-term growth. Q CELLS brings industry-leading technology
and R&D that can be leveraged across the combined product portfolio, and
downstream expertise in development, EPC and project financing. At the same
time, we plan to leverage SolarOne's cost-efficient module manufacturing base
together with Q CELLS' industry-leading highly efficient and fully automated
cell manufacturing knowhow to further improve the combined company's cost
competitiveness. Our combined scale and optimized global footprint will
strengthen our strategic and financial position and should enable us to
accelerate growth in the most important solar markets and increase shareholder
value."
Mr. Charles Kim, chief executive officer of Q CELLS, said, "Q CELLS'
commitment to quality, technology, and innovation has enabled us to become one
of the most respected solar companies with a world-renowned product reputation
and downstream expertise. The merger with SolarOne creates a truly global
platform that will provide us with a platform to achieve greater economies of
scale and facilitate expansion into important solar markets including China.
Together with SolarOne, we look forward to delivering superior solar solutions
to our customers and growing our global leadership position."
SolarOne is currently one of the world's largest solar wafer, cell and module
makers with operations and manufacturing centered in China and more than 7,500
employees across China, Germany and the United States. The business has a cell
and module production capacity of 1.75 and 2.07 gigawatts, respectively, and
serves customers in Japan, China, the United States, Korea, Canada, the United
Kingdom, South Africa and Germany.
Acquired by Hanwha Group in 2012, Q CELLS is the largest supplier of
photovoltaic product solutions in Europe (based on global shipments in 2014
year-to-date), and has almost 1,800 employees in Germany and Malaysia. The Q
CELLS brand is widely recognized in the industry for its high quality solar
cells and modules, system solutions and complete power plants, with a cell and
module manufacturing capacity of 1.53 gigawatts and 130 megawatts,
respectively. Q CELLS serves customers through its international sales network
covering Germany, Malaysia, Japan, the United States, Korea, France, Chile and
Australia. Q CELLS generated approximately $416.1 million in revenue based on
unaudited IFRS financial information for the six months ended June 30, 2014.
Strategic Benefits of Combination
o Optimized Global Manufacturing Footprint: The combined company will have a
strategically diversified manufacturing footprint that provides
significant competitive advantage. Q CELLS brings award-winning technology
and manufacturing from Germany with a highly efficient and fully automated
manufacturing base in Malaysia that is not subject to US and EU
anti-dumping policies. SolarOne brings a substantial manufacturing
platform in China, with development of a new facility in Korea planned for
2015. This broad manufacturing presence is expected to provide greater
supply chain flexibility and resilience, allowing the combined company to
reduce production costs, improve supply chain efficiency and be
well-positioned to navigate trade barriers.
o Complementary Market Positioning: The combined company will have stronger
market positions in the key solar markets of the United States, China,
Japan and Europe, with the opportunity to further solidify market share
and enter new markets through an integrated sales and marketing platform.
o Expansion into Downstream: The combined company will expand into
downstream initially leveraging 2.17 gigawatt global downstream pipeline
(including 1.12 gigawatt pipeline under partnership with Hanwha-affiliated
companies), of which 30% is in late stage and Q CELLS' more than 700
megawatt of project installation expertise since 2007.
o Premium Technology and R&D: The combined company plans to leverage Q CELLS
premium technology and R&D processes to improve product performance and
reliability, reduce system costs and drive increased overall return on
investment for customers.
o Revenue, CAPEX / Financing and Cost Synergy Potential: The combination is
expected to create significant cost synergies in supply chain and
corporate operations, as well as efficiencies in capital expenditure
spending and improved access to global capital markets with improved
capital structure. Expansion of the downstream business and complementary
market positions are expected to drive significant revenue synergies over
time.
Based on the unaudited financial information for each of SolarOne and Q CELLS
for the six months ended June 30, 2014 (and after adjusting for approximately
$49 million of intercompany transactions), the total revenue for the two
companies was approximately $733 million. More financial information for the
combined companies will be provided in the shareholder circular, which
SolarOne expects to be prepared and mailed to SolarOne's shareholders before
the end of December 2014, which will also be filed with or furnished to the
U.S. Securities and Exchange Commission.
Seongwoo Nam of SolarOne will lead the combined business as chairman and chief
executive officer, DK Kim will serve as chief commercial officer, Jinseog Choi
will serve as chief technology officer and Jay Seo will become chief financial
officer. The combined company's executive headquarters will be located in
Seoul, Korea, and its technology and innovation headquarters in Thalheim,
Germany.
SolarOne's board of directors, acting upon the unanimous recommendation of the
special committee (the "Special Committee") formed by its board of directors,
approved the share purchase agreement for the transaction and resolved to
recommend that SolarOne's shareholders vote to approve the transaction. The
Special Committee, which is comprised solely of independent directors of
SolarOne who are unaffiliated with Q CELLS, Hanwha Solar Holdings Co., Ltd.
("HSH"), Hanwha Chemical Corporation or any of the management members of
SolarOne, negotiated the terms of the purchase agreement with the assistance
of its financial and legal advisors.
According to the terms of the transaction, SolarOne will issue approximately
3.7 billion SolarOne ordinary shares (being the equivalent of approximately
740.2 million American depositary shares) to HSH in exchange for the transfer
of 100% of the outstanding share capital of Q CELLS by HSH to SolarOne. The
new shares to be issued by SolarOne to HSH in the transaction represent
approximately 8.09 newly issued shares for each of SolarOne's currently
outstanding shares on a fully diluted basis. If consummated, the transaction
would result in HSH increasing its ownership of SolarOne from approximately
45.7% to approximately 94%, in consideration of HSH'S transfer of full
ownership of Q CELLS to SolarOne. Based on SolarOne's December 5, 2014 closing
share price, the implied equity value for Q CELLS is approximately $1.2
billion.
The transaction is subject to approval from SolarOne shareholders in addition
to regulatory approvals and other customary closing conditions.
Credit Suisse is serving as financial adviser and Debevoise & Plimpton is
serving as legal counsel to SolarOne. Citigroup is serving as financial
adviser to Q CELLS and Paul Hastings is serving as legal counsel to Q CELLS
and HSH. Houlihan Lokey is serving as financial adviser and O'Melveny & Myers
LLP is serving as legal counsel to the Special Committee of SolarOne.
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