Hanwha SolarOne to merge with Hanwha Q CELLS


South Korean solar conglomerate Hanwha Solar Holdings has announced today that it is to merge its two brands – Hanwha SolarOne and Hanwha Q Cells – into one consolidated company in a move valued at around $2 billion.

Germany's Hanwha Q Cells will have its entire $1.2 billion in stock bought by U.S.-listed PV company Hanwha SolarOne, revealed the company’s COO today, D.K. Kim. Speaking to Bloomberg, Kim hinted that the consolidation will help both companies compete in an increasingly tough global market.

"Unless you have [these] economies of scale, and sufficient balance sheet, it will be harder to compete," said Kim.

According to an e-mailed statement by Hanwha Solar, the merger is a response to ongoing trade disputes between China and the U.S., as well as the European Union, which have revolved around anti-dumping (AD) tariffs imposed on Chinese solar panel imports.

With prominent manufacturing operations in Malaysia, much of Q Cells' output is free from further trade disputes, which creates a "significant opportunity for a geographically diverse company", said Kim.

Hanwha SolarOne's CEO Seongwoo Nam said: "The combination of SolarOne and Q Cells creates a formidable global leader that is well positioned for long-term growth. Q Cells brings industry-leading technology and R&D that can be leveraged across the combined product portfolio, and downstream expertise in development, EPC and project financing.

"At the same time, we plan to leverage SolarOne's cost-efficient module manufacturing base together with Q Cells' industry-leading highly efficient and fully automated cell manufacturing knowhow to further improve the combined company's cost competitiveness. Our combined scale and optimized global footprint will strengthen our strategic and financial position and should enable us to accelerate growth in the most important solar markets and increase shareholder value."

Just last week, Hanwha SolarOne revealed that it is to build a 230 MW fab in South Korea in an attempt to further circumnavigate these AD duties.

The transaction will see Hanwha SolarOne issue 740.2 million American depositary shares to buy Hanwha Q Cells, subject to approval by Hanwha SolarOne shareholders.

Deal promises "industry-leading scale"

Investor notes issued by Hanwha Solar and seen by pv magazine detail how the merger and acquisition breaks down and where the combined company hopes to position itself globally moving forward.

Hanwha Solar hopes to create a "new global leader" in the solar industry, citing its own company filings to suggest that the combined companies’ 3.28 GW of PV cell capacity produced this year positions it as the world’s largest cell manufacturer, ahead of Yingli on 3.19 GW and Trina on 3 GW.

In terms of module capacity, the combined company will end the year with 3.23 GW global manufacturing capacity for PV modules, with a joint HQ at Thalheim, Germany, and in Korea overseeing a truly global presence.

The company also said that it hopes to expand further into the downstream market, creating long-term value through levelized cost of electricity (LCOE)-driven products. The merger will enable the company to enjoy CAGR growth of approximately 12% in China and Japan over the next two years, the company says, and as musch as 38% in the U.S. market over the same period – with the recent 230 MW module facility in Korea and Q Cells’ Malaysian manufacturing facilities playing a pivotal role in that growth.

Combined, the company has a pipeline of 2.17 GW of downstream projects, from Japan to Panama, and can now draw upon a “proven execution record” of more than 700 MW of projects installed globally.

In a pre-prepared FAQ, the company revealed that it is to "selectively enter" key large emerging solar markets, including the Middle East and Latin America, but stressed that the majority of its market focus will remain rooted in China, Japan, the U.S. and Europe.

Stefan de Haan, principal solar analyst at IHS, told pv magazine that the merger was exciting, if not entirely unexpected, news. "The merger is a major move in the PV upstream module manufacturing industry," he said.

pv magazine has provided further analysis of the merger here.

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