Trina, Yingli eyeing Suntech

Consolidation remains a feature of the photovoltaic manufacturing landscape, however signs are emerging that one of the biggest acquisitions in the solar industry’s history may take pale in the coming weeks. Chinese media is reporting that tier one manufacturers Trina and Yingli are both considering acquiring all or part of Suntech’s assets, and taking over some of its debt.

The Chinese language coverage of developments regarding Suntech indicate that Trina and Yingli may not be the only interested parties. Reports show that the firm Beijing Putian New Energy may also be interested in acquiring Suntech. Although it continues that the companies are acting cautiously given Suntech’s US$1.75 billion in debt.

Alt Energy Stocks elaborated further on the emerging story yesterday, reporting that Trina executives in particularly are divided, given Suntech’s debt pile. Writing for the energy website, Doug Young indicated that he believes that any acquisition would involve one of the players purchasing most of Suntech’s assets, while taking on only a limited amount of its debt.

"It would not be surprising," said market analyst Paula Mints, "it was always expected and we will wait and see if there is a shotgun marriage or a division of assets." Mints told pv magazine that there has been information leaked indicating that Suntech is currently in talks with a major rival.

The additional capacity if either Trina or Yingli were to acquire a significant portion of Suntech’s assets, would make a major impact on Chinese solar manufacturing landscape. In a post on her website, Mints noted that, "many manufacturers are adding capacity circumspectly in 2013, some however, are building enthusiastically laying their hopes primarily on the market in Japan."

Renewable Analytics’ Dirk Morbitzer said that an acquisition of Suntech would align with Chinese government objectives, for consolidation to take place within solar manufacturing in the country, and therefore a participating firm would curry favour with the authorities.

"As domestic demand and international demand is growing, manufacturers need to invest into new production capacity – buying into Suntech allows to buy assets and a trained labor force – at the moment the value of the assets might be questionable as Suntech has not invested in upgrading its equipment as the financial situation deteriorated in 2011," Morbitzer told pv magazine. He added, "a very thorough due diligence is needed."

The value of Suntech for Yingli or Trina would be its manufacturing assets and workforce, says Morbitzer, while for a smaller manufacturer the Suntech brand would also be of value and therefore keep it alive. The San Francisco based analyst says he thinks it unlikely that a buyer would assume a large part of the debt.