SolarWorld buys Bosch solar division

SolarWorld AG on Tuesday reached a deal to buy parts of Robert Bosch GmbH’s solar energy business.

As part of the agreement, SolarWorld will take over cell production capacity of 700 MW as well as module production capacity of 200 MW from Bosch Solar Energy AG in Arnstadt, a city in the German state of Thuringia.

The newly formed SolarWorld Industries-Thüringen GmbH, a 100% subsidiary of Bonn-based SolarWorld, will take over the majority of Bosch Solar Energy’s manufacturing plants and other assets. The Arnstadt site will continue to employ about 800 workers in cell and module production. SolarWorld said the acquisition would not reduce its financial resources.

The deal will provide SolarWorld with production capacities of more than 1 GW along each of the wafer, cell and module stages of the solar value chain. SolarWorld said it plans to continue to supply Bosch Solar Energy’s existing cell and module customers.

The company added that the high-performance mono-crystalline cells production plant will complement its technological portfolio. SolarWorld said it would now pool research and development activities aimed at improving high efficiency solar cells "to create further competitive advantages for the group and enable further cost reductions."

SolarWorld’s acquistion is limited to the Arnstadt facility and does not include Bosch’s other solar assets, such as Aleo Solar in Prenzlau.

Solar industry analyst Goetz Fischeck of Smartsolar Consulting said SolarWorld most likely did not pay cash for the Bosch assets but instead committed itself to maintaining the Arnstadt facility and its personnel for a certain amount of time, possibly up to two years.

For Fischbeck, the deal is reminiscent of SolarWorld’s takeover of Shell Solar seven years ago – an agreement in which SolarWorld did not have to pay anything for the acquisition, while Shell agreed to assume SolarWorld’s losses associated with acquisition for two years. Fischbeck says such an arrangement could be likely in the Bosch deal.

The big question, according to Fischbeck, is how SolarWorld plans to make the Arnstadt site profitable. Bosch Solar Energy made immense losses despite Bosch’s business acumen. Furthermore, SolarWorld has considerable debt of its own and cannot afford to increase its debt in Arnstadt.

Bosch Solar Energy’s cell production was of obvious interest to SolarWorld, much more so than Aleo Solar’s module business.

Bosch’s main concern was likely that the Arnstadt facility remain in operation and its staff employed, which a SolarWorld rescue of the factory provided. A loss of the facility would mean a major public relations fiasco for the group.

Indeed, Bosch said a second investor planned to lease shopfloor space at the site to manufacture pharmaceutical products under clean-room conditions, creating approximately 100 new jobs.

Bosch also intends to relocate the manufacturing operations of an automotive electronic product from its factory in Hatvan, Hungary, to Arnstadt, and to set up a service organization and a trading company to handle existing obligations. Over the medium term, the group hopes the measures will preserve some 250 further jobs.

In a statement, Bosch said the parties had agreed not to disclose details of the deal. The transaction remains subject to antitrust approval as well as further other conditions. The deal is expected to close in February.

Bosch announced in March that it would exit the crystalline solar sector and cease production of photovoltaic ingots, wafers and cells.

The German engineering and electronics company made the decision amidst mounting losses and decreasing prices stemming from a glut of solar equipment. Bosch lost €2.4 billion ($3.25 billion) since creating the solar energy division in 2008 after buying Aleo Solar and Ersol. It made a €1 billion ($1.35 billion) loss in 2012.