Siemens buys Solel Solar for $418 million
German industrial conglomerate Siemens will buy Solel Solar Systems for $418 million, in order to expand its business with solar thermal power plants. The two companies reached the agreement yesterday in Germany.
Siemens came out the winner in a tender process, in which it competed against other international giants Alstom, Mitsubishi, General Electric, Ariva and Shari Arison's Housing and Construction. Credit Suisse managed the tender on behalf of Solel. The sellers are the London-based Ecofin investment company (55%); a group of investors lead by Belgian businessman Louis Begeau (30%); and Solel employees (15%). In January Ecofin bought 40% of Solel shares at a company value of $262 million.
Siemens is expected to make Solel's platforms the focus of its thermo-solar energy business. Unlike photovoltaic solar panels, which use sunlight to create electricity, Solel's solar thermal power plants use the sun's heat to create steam which then turns a turbine to generate power. Through its purchase of Solel, Siemens is targeting the solar thermal sector, which uses a different technology than that of the much bigger photovoltaic sector.
"We aim to be the global market leader in the solar thermal sector," Siemens Chief Executive Peter Loescher said during a conference call. The company's name will most likely be changed to Siemens-Solel, and Siemens is willing to continue using the manufacturing plant here in Bet Shemesh, for five years. However, after this period, the Israeli office is expected to concentrate mostly on research and development.
Financing on the projects will be managed from Germany. This is Siemens second solar power buy in Israel; two months ago Siemens bought 40% of Arava Power for $15 million.
Solel has 400 employees in Israel and another 100 in Spain.
"In the future, we'll be able to offer the key components for the construction of parabolic trough power plants from a single source and to further enhance the efficiency of these plants," Siemens' Renewable Energy division head Rene Umlauft said in a statement released yesterday. Siemens said it expects to close the acquisition by the end of 2009.
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