German inverter manufacturer SMA Solar Technology on Wednesday announced a new strategic partnership with Danish engineering and manufacturing giant Danfoss Group.
As part of the agreement, Danfoss will acquire a 20 percent share in SMA, which will take over Danfoss solar inverter business.
While SMA's supervisory board has approved a letter of intent regarding the formation of the partnership, the companies are still negotiating details of the transaction; the deal also remains subject to anti-trust approval.
The team-up would also include close collaboration in research and development, procurement and sales.
Danfoss will acquire 6.94 million SMA shares at a price of 43.57 per share from the SMA founders, their trusts and families for a total of 302.38 million. After completion of the transaction, SMA's freely tradable shares in free float will be at 25.05%, while SMA founders, their trusts and families will hold 54.95%. In addition, Danfoss has agreed not to buy or sell shares for a lock-up period of at least two years. The share purchase is subject to regulatory approval. The deal is expected to be finalized in the third quarter of the year if approved.
"The strategic alliance with Danfoss strengthens SMA's leading position in the global photovoltaic market," said SMA CEO Pierre-Pascal Urbon. "We are faced with a highly competitive market environment and increased price pressure. In this context, SMA will benefit from Danfoss' years of experience in automated drives.
"This market has been characterized by fierce competition for a long time. Accordingly, the strategy of the Danfoss group targets continuous cost improvements through global sourcing and cost down initiatives. By establishing a close cooperation there is significant potential to improve the cost position in both companies," Urbon added.
SMA said the acquisition of Danfoss' solar inverter business would increase the attractiveness of its product portfolio. After the completion of the transaction SMA will launch new products for the fast-growing market segments of medium-sized photovoltaic plants in Europe, China and the United States.
"With the strong cooperation between Danfoss, as a leading specialist in the field of drives, and SMA, with a unique positioning in the solar inverter market, both companies will create one of the worlds largest converter alliances with a global presence," said Danfoss President and CEO Niels B. Christiansen.
"A shareholding of 20% in SMA is a bold statement and proves our continued dedication and confidence in the solar business. We are committed to drive innovation and competitiveness by integrating Danfoss know-how from the drives technology to the photovoltaic inverter business. Danfoss will certainly benefit from economies of scale and the high growth rates of the solar industry."