REC Solar ASA and Bluestar Elkem Investment Co. Ltd. (Hong Kong) (Bluestar Elkem) have reached a transaction agreement. Bluestar Elkem will purchase 100% of the shares in Luxembourg company, which is to be established, and own REC Solar Holdings AS as well as all of the assets and liabilities of REC Solar. The transaction is subject to approval by an extraordinary general meeting of REC Solar before January 16th, 2015. However, it is still unclear about Bluestar Elkem’s strategy.
According to the deal, Bluestar Elkem will purchase assets of REC Solar at a cash purchase price equal to NOK 108.50 per share; the total cash consideration is NOK 4,340 million (approximately US$640 million). The Board of Directors of REC Solar has unanimously resolved to recommend the transaction to its shareholders. Meanwhile, the deal pledges from holders of 20.2% of the outstanding shares not to sell before the general meeting.
Ole Enger, the Chairman of REC Solar described the transaction as “a result of an extensive and broadly marketed process where the Company (REC Solar) has explored opportunities to maximize value for shareholders.” He wishes the combination can bring positive outcome for REC Solar and looks forward to a stronger platform for the company to further develop.
"The Elkem Group has a strategic goal to grow its presence in the solar industry. The ambition is to establish a leading integrated PV player,” said Helge Aasen, the CEO of Elkem AS. “There is a good strategic match between REC Solar and Bluestar Elkem ensuring that a combined entity will have a strong basis for further development of the business by leveraging REC Solar's global brand, strong distribution channels and reputation for quality.”
As China is still struggling against trade disputes in the U.S. and Europe, Bloomberg New Energy Finance (BNEF) infer the move as a solution to help circumvent the trade problems. After completely purchasing REC Solar, Chinese companies can extend their global deployment of solar panel manufacturing industry, a necessary strategy for them to deal with the possible consequences from the trade disputes. By purchasing a foreign manufacturer like REC Solar, Chinese makers will be able to accelerate establishing abroad subsidiaries and factories.
“More such cases are likely to follow, given Chinese companies have a need to bypass international trade disputes and to penetrate local markets,” cited in a Bloomberg report from Xiaoting Wang, an analyst at BNEF in Hong Kong. “Chinese companies will maintain their dominant position in the PV manufacturing industry by owning more overseas capacities.”
Established in Norway, REC Solar was divided from Renewable Energy Corp. (REC) ASA in October 2013 and now focuses on manufacturing solar panels at a factory in Singapore. The Norwegian segment is currently producing solar polysilicon as a brand “REC Silicon ASA.”
China will dominate the global solar manufacturing in near future, but it is not clear about why Bluestar Elkem decided to purchase REC Solar so far. Funded as an industrial cleaning company, Bluestar Elkem has shifted to focus on new chemical industry, chemical materials, animal nutrition and environmental science. The deal may represent its new roadmap into the solar industry because of REC Solar’s reputation for solar industry, commented analysts in EnergyTrend.