Trina to go private in $1.1 billion deal

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Trina Solar is set to become the largest Chinese PV manufacturer to go private. Under a deal announced today, Trina shareholders are set to receive 23 cents per share, a premium of 20.2% on average share value over the previous 90 days, and 40.6% on the American depositary share closing price on July 29. ADS holders will receive $11.60 per share.

The "going private" proposal was first disclosed on December 11.

Ash Sharma, the senior director of IHS Markit’s solar and energy storage research division, said the move is likely a result of the emerging module oversupply market.

"There are quite a few reasons [for the move]," said Sharma. "Part of it is depressed share values, but another reason is that the companies would have greater freedom when private than being responsible to public shareholders."

"With oversupply coming this year, or even underway now, companies are under pressure from shareholders to protect margins. But most of these module companies are going to have to significantly cut prices, and margins will be extremely thin if not negative, in order to maintain volume and market share," said Sharma."

The IHS analyst notes that other Chinese companies are likely to follow suit.

While as a private company Trina will have more freedom to price more aggresively, the move may bring with it additional challenges.

"It allows Trina to be a bit more long-term in its approach, rather than focus on quarter to quarter margins and be more strategic rather than having to answer to shareholders," said Sharma. "But as a private company how is it going to continue to raise capital? It is not going to have as easy access [to captial] in the future."

In a statement from Trina, the investor consortium partners are listed as Jifan Gao himself, Shanghai Xingsheng Equity Investment & Management Co., Ltd., Shanghai Xingjing Investment Management Co., Ltd., Great Zhongou Asset Management (Shanghai) Co., Ltd., Liuan Xinshi Asset Management Co. and affiliate companies.

Trina’s company board unanimously approved the move. It requires a two-third vote at a shareholder meeting to go ahead. Trina expects to finalize the transaction and formally delist from the New York Stock Exchange in Q1 2017.