Electrical equipment manufacturer and wannabe polysilicon giant Shanghai Electric this morning revealed May's change of solar policy in Beijing played a significant part in the collapse of its planned acquisition of a controlling stake in China's largest poly maker.
The company's planned CNY25 billion ($3.64 billion) purchase of a 51% stake in GCL-Poly subsidiary Jiangsu Zhongneng collapsed on Friday after both parties announced the market was not “mature enough” to complete the transaction.
With analysts wondering whether the deal had fallen victim to the decision by the Beijing authorities to rein in PV subsidy commitments at the end of May – which solar watchers are predicting will lead to huge global oversupply of polysilicon – Shanghai Electric this morning told investors the policy change was a contributory factor in the cancellation of the agreement.
“An important new policy concerning [the] photovoltaic industry was issued on 31 May 2018, the subsequent impact of which is still uncertain,” Shanghai Electric stated, in an online “SSE Roadshow” to address investor concerns about Friday's decision which went ahead in the early hours of this morning CET.
No consensus reached
“Therefore it is difficult for both parties to reach a consensus on the relevant co-operation terms and a plan for the transaction within a short period of time. Therefore both parties to the transaction believed that the timing and conditions for continuing to advance this assets acquisition, by way of [an] issuance of shares plan, were not favorable.”
Shanghai Electric added it was optimistic about the future of the global solar market thanks to China's ongoing renewables policy.
The company noted the National Development and Reform Commission and National Energy Agency's Energy Production and Consumption Revolution Strategy (2016-2030) called for non fossil fuels to generate half of China's energy by 2030.
Adding that predicted solar capacity worldwide by 2022 will be 1.01 billion kilowatts, Shanghai Electric stated: “Our company is optimistic about the photovoltaic industry in the long run, and has been paying attention to any opportunity to tap into the photovoltaic industry.”
A subsequent announcement to the Hong Kong Stock Exchange stated trading in Shanghai Electric stock will resume tomorrow.
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