Motech Industries Inc (茂迪) yesterday said its board has approved a plan to acquire a smaller local rival for NT$2.05 billion (US$65 million) via a share swap, creating the world’s largest solar cell maker.
The merger with Topcell Solar International Co (聯景光電) should boost Motech’s annual capacity to about 3 gigawatts from the current 2 gigawatts, allowing it to surpass Neo Solar Power Corp’s (新日光), 2.1 gigawatts.
“The merger will help improve operational efficiency by integrating the resources of the two companies. The new firm will also have stronger pricing power as the company scale expands,” Motech spokesman Jack Hsieh (謝祖葳) said in a statement submitted to the Taiwan Stock Exchange.
Under the agreement, each Motech share is to be exchanged for six Topcell shares. Motech plans to issue 45.672 million new shares for the merger, which are worth NT$2.05 billion based on Motech’s closing price of NT$45 yesterday.
“We are positive about this merger for the industry and for the companies,” TrendForce Corp (集邦科技) solar industry analyst Jason Huang (黃公暉) said.
“Motech will get the much-needed capacity to safeguard its market share, which is crucial to staying competitive in a highly competitive and expanding industry like the solar sector,” Huang said.
Global solar market demand is expected to increase 16.5 percent annually to 51.4 gigawatts next year from an estimated 44 gigawatts this year, TrendForce said early this month.
The researcher attributed the growth to robust demand from China, the US and Japan.
In addition, it “is a bargain for Motech to buy one gigawatt of capacity for just NT$2 billion,” Huang said.
It will take NT$5 billion to build 1 gigawatt of new capacity, he said.
On top of that, Topcell can help expand Motech’s customer base, he said.
Topcell mostly supplies solar cells to Chinese solar cell module makers, while Motech has a diverse customer portfolio, he said.
After the deal is completed in July next year, Topcell’s parent company, United Microelectronics Corp (UMC, 聯電), will hold a 9 percent share of Motech, making UMC the second-largest shareholder after Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).
UMC is the nation’s second-largest contract chipmaker after TSMC.
“The sale will be a relief for UMC,” Huang said.
UMC has booked losses each quarter for its new businesses, mainly its solar business, for a long time.
This quarter, UMC expects to book NT$400 million in losses from its new business.
Huang forecast that most solcar cell companies would be running at 90 percent capacity next quarter as demand has rebounded after the US Department of Commerce early this month made its final ruling on an anti-dumping and anti-subsidy probe.
Taiwanese solar cell makers will be required to pay an average duty of 19.5 percent, lower than the 24.23 percent indicated in July’s ruling.
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