Jiangsu Shunfeng’s Acquisition Of Suntech To Top $540 Million

November 11th, 2013 by James Ayre

Prominent Chinese solar manufacturer Jiangsu Shunfeng has announced the details behind its planned acquisition of Wuxi Suntech. The move for consolidation of the two noted corporations will, if successful, do a great deal to improve the position of real estate magnate Cheng Kin Ming with regards to the solar energy manufacturing market.

Among those details is the estimated price of acquisition, and it’s huge — likely surpassing US $540 million dollars. The announcement, which was recently made at the Hong Kong Stock Exchange, specified that the acquisition itself would cost them about RMB 3 billion (US $493 million), with a further US $25 million headed to the Wuxi Guolian investment vehicle owned by the Wuxi local authorities. That fee will be due within three months of the completion of the deal.

Image Credit: Suntech China

That fee is part of the acquisition because of a recent deal between Wuxi Guolian and Wuxi Suntech. A deal that saw Wuxi Guolian pledge $150 million in investment into Suntech’s US-registered parent company — a company that Shunfeng doesn’t acquire as part of the Wuxi Suntech deal.

PV Magazine provides more information on the potential deal:

In return for the cash, the deal – which has to be approved by Shunfeng shareholders, the local authorities and the extensive list of Wuxi Suntech creditors – would present Shunfeng with two Wuxi manufacturing facilities which could bring 3.6 GW of annual cell and module production capacity as Shunfeng continues its expansion into the downstream business in China.

Wuxi Suntech, which went bankrupt on March 20, had three production lines in the coastal city but one of its two cell production facilities is disused and loaded with obsolete equipment. A second – 1.6 GW – cell production line has been idle since August 2012 with Shunfeng stating it could be restored to a 1.2 GW annual production rate. Of the two production lines in Wuxi Suntech’s module manufacturing facility, a 1.4 GW line is operating normally with a smaller – 1 GW – line idle since November 2012.

Something to note — the aforementioned real estate magnate, Cheng Kin Ming, currently owns a 30% stake in Jiangsu Shunfeng’s Shunfeng Photovoltaic parent company, as well as a 25% stake in solar wafer manufacturer LDK Solar.

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Tags: Cheng Kin Ming, Cheng Kin Ming Solar, Cheng Kin Ming solar energy, China, China Solar, Hong Kong Stock Exchange, Jiangsu Shunfeng, Jiangsu Shunfeng Suntech, LDK Solar, Shunfeng, Sunetech Cheng Kin Ming, Suntech, Suntech sale, Wuxi Suntech Jiangsu Shunfeng

About the Author

James Ayre 's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.

JamesWimberley

Cheng Kin Ming is a risktaker. His other solar investment, LDK, is just keeping its head above water. But the recovery in the market is rapid and his bet may pay off handsomely. Perhaps he’ll press for a merger to make a challenger for the top slot.

The numbers in the report aren’t easy to stick together, but Suntech is having to write off substantial cell production capacity as obsolete. Less so for modules, a slower-changing part of the chain. It’s reasonable to think that this pattern is replicated across the Chinese solar industry. As the leaders continue to drive up quality and drive down costs, they strand more and more assets of the laggards.
- Matt
  
  Ming might also have information from the inner circle of China government that the amount of planned PV installs in China are about to get a big bump, including help. They have to do something more aggressive about their air, closing cities is not a workable solution. If in 3-6 months we get big news on that front, then this deal will look a lot better.
  - Bob_Wallace
    
    China also has grid difficulties. I read something, somewhere recently about China moving harder on distributed solar as a way to get more renewables on line while they improve their grid to deal with more wind.
  - dylanpete
    
    Yes, the Chinese government is expected to increase efforts to stimulate renewable energy. Environmental protection is told to be an important topic for The Third Plenary Session of the 18th CPC Central Committee that ends today. So we might expect some announcements in the coming days.
    In the meantime Shandong province has already increased subsidies for distributed solar and other provinces may follow soon.