American solar-power giant SunPower is buying control of SunRay Renewable Energy at a price valuing the company at $300 million. SunPower is paying private equity fund Denham Capital $277 million: $235 million in cash and another $42 million in a letter of credit and promissory notes, SunPower announced yesterday.
SunRay is managed by Israelis, headed by CEO Yoram Amiga, and was the first foreign solar energy outfit to enter the Israeli market after it was opened to competition in 2009.
SunRay also established a wholly-owned Israeli subsidiary, SunRay Israel Blue White, which is working on projects for fields of solar photovoltaic panels in the Negev and taking advantage of the parent's financial resources. Solar panel manufacturer SunPower is one of SunRay's main suppliers. SunRay is headquartered in Malta.
SunPower's stock rose nearly 4% on the Nasdaq on the latest news. SunPower's market value is $1.9 billion.
In Israel, SunRay has contracted with a number of kibbutzim and moshavim for land rights to build solar power farms, and has submitted plans to the National Planning Commission to establish photovoltaic arrays at Kibbutz Urim in the northern Negev. Kobi Katz, the CEO of SunRay Israel, said the sale was a vote of confidence by SunPower in the Israeli solar market.
Denham Capital, based in Boston, includes among its investors Bill Gates and Harvard University. The fund bought control of SunRay two years ago and committed to providing $200 million in funding for the firm's projects.
The deal, which could signal a start to the long-expected consolidation in the solar industry, will expand SunPower's operations outside North America.
The San Jose, California-based company also said it had sufficient cash to close the transaction and did not intend to raise equity capital to finance the acquisition. The deal is expected to close in the first half of 2010.
Demand for solar-power products has picked up after a difficult 2009, when the global credit crisis dried up financing for new projects and panel prices plummeted.
Many observers see solar demand growing this year, but this growth could suffer from Germany's decision to cut subsidies for the industry. Germany is the world's largest solar market.
On closing the deal, SunPower will acquire a pipeline of solar photovoltaic projects totaling more than 1,200 megawatts in Italy, France, Israel, Spain, the United Kingdom and Greece, the company said.
The pipeline includes projects in various stages of development.
The acquisition would expand SunPower's power-plant-development business and complements its European engineering, procurement and construction business, the company said.
JPMorgan Securities was the financial adviser on the deal to acquire SunRay.