Chinese-owned Elkem to buy REC Solar

A division of the state-owned China National Chemical Corporation (ChemChina) has agreed to buy Norway’s REC Solar ASA for NOK 4.34 billion ($640 million).

REC Solar on Monday said Hong Kong-based Bluestar Elkem Investment Co. Ltd. would acquire a wholly owned Luxembourg company that would in turn own REC Solar Holdings AS and all of its assets and liabilities.

The Chinese group is set to complete the deal through its Norwegian subsidiary, silicon and alloy producer Elkem AS, which was acquired in 2011 by ChemChina’s China National Bluestar.

The agreement remains subject to approval by an extraordinary general meeting of REC Solar shareholders, to be held no later than January 16. REC Solar said its board of directors will recommend the deal to its shareholders.

Elkem CEO Helge Aasen said, "The Elkem Group has a strategic goal to grow its presence in the solar industry. The ambition is to establish a leading integrated PV player."

Aasem added that Elkem and REC Solar, which operates production facilities in Singapore, had developed a strong business relationship and there was a good strategic match between the companies that ensured a combined entity would "have a strong basis for further development of the business by leveraging REC Solar’s leading global brand, strong distribution channels and reputation for quality."

REC Solar Chairman Ole Enger said the proposed deal was "a result of an extensive and broadly marketed process where the company has explored opportunities to maximize value for shareholders. … The board believes that a combination with the Elkem Group will provide a strong platform to further develop REC Solar."

REC Solar stressed that it had undertaken not to actively solicit offers from third parties that would compete with the Elkem offer and has accepted a cost coverage fee of $10 million if the board changes its recommendation to accept the agreement and the transaction is not completed due to a better offer.

The companies expect to complete the deal by March or April. REC Solar’s board plans to then delist and liquidate the group.

REC Solar was spun off Renewable Energy Corporation (REC) last year after the parent company split its business in two, also creating the separate REC Silicon ASA with operations in the U.S. state of Washington.

Speaking to Bloomberg, Xiaoting Wang, an analyst at Bloomberg New Energy Finance, said more such cases would likely follow "given Chinese companies have a need to bypass international trade disputes and to penetrate local markets" and predicted that Chinese companies would maintain their dominant position in the PV manufacturing industry by owning more overseas capacities.

REC Solar ASA is minority shareholder in the U.S. commercial PV installer REC Solar. The U.S. operations inform pv magazine that it is not involved in the Bluestar transactions.