Hanwha Q CELLS Goes Private In $825 Million Deal

Korean solar PV company Hanwha Q CELLS announced earlier this month that it has agreed to go private, the latest in a long stream of solar manufacturers making the decision to de-list, in a move connected to its acquisition by a subsidiary of Hanwha Chemical Corporation.

Already we have seen Trina Solar, China-based PV manufacturer ReneSola and Shanghai-based solar cell and module manufacturer JA Solar, and Canadian Solar, another of the world’s leading solar manufacturers, consider taking themselves private in various buyout deals, and in most cases following through on it.

In August, Hanwha Q CELLS revealed that it was similarly looking to de-list from the NASDAQ after receiving a “going private” letter. Unlike other solar companies, Hanwha Q CELLS was set up somewhat differently as it was the flagship subsidiary company of the larger Hanwha Group. The proposal to take the company private was essentially an acquisition proposal made by Hanwha Solar Holdings, a subsidiary of Hanwha Chemical Corporation, an affiliate of the Hanwha Group.

This proposal was followed up a month later by news that the Q CELLS division would be merged with the Hanwha Group’s Advanced Materials business in a move intended to enhance the Advanced Materials business portfolio through diversifying into solar. On the flip side, Q CELLS will benefit from closer alignment with the company’s Advanced Materials manufacturing network and R&D capabilities.

“The proposed merger between Hanwha Advanced Materials and Hanwha Q Cells Korea will enable Hanwha Chemical – which will govern Hanwha Q Cells Korea as its wholly-owned subsidiary – to enhance its long-term strategy of cultivating further solar growth,” Hanwha Q-CELLS said. “In the mid to long-term, Hanwha will focus on high value-added solar markets such as the US and Europe, and will continue seeking to improve the company’s solar product efficiency while investing in new technology to help drive lower LCOE [levelized cost of electricity].”

The fate of Hanwha Q CELLS was confirmed last week by reports that the company had agreed to be acquired and de-list from NASDAQ in a deal worth approximately $825 million. Specifically, Hanwha Solar Holdings Co Ltd will buy every Hanwha Q Cells ordinary share that it does not already own for $0.20 in cash, and each American depositary share (ADS) for $9.90 in cash — representing a 50% premium on the closing price of Q CELLS’ ADS on August 2. Considering that Hanwha Solar Holdings already owns a stake of approximately 93.9% in Q CELLS, it won’t require a lot of effort to pick up the rest of the company, and it also explains why the acquisition did not require shareholder approval.

“I think they have made much the same calculation as other Chinese firms,” explained Jenny Chase, head of Solar Analysis at Bloomberg New Energy Finance. “Being listed in the US is expensive, they cannot easily sell in the US thanks to the trade wars, the US isn’t a major market anyway, and if they did want to be listed, they might well get a better valuation elsewhere.”

According to the filing Hanwha Q CELLS submitted to the US Securities and Exchange Commission, it “has incurred significant costs but has not been able to derive the benefits it anticipated from its public company status and that the Company’s shareholders have not been able to secure the liquidity it anticipated in connection with ownership of a publicly traded company, due to the small public float, lack of a market for corporate control and limited trading volume.”

“Thus, Parent began to consider potential actions that could be taken to alleviate the effect of these disadvantages to the Company and the Public Shareholders, including the possibility of taking the Company private.”