One of the world’s largest solar photovoltaic (“PV”) module manufacturers, Trina Solar Limited TSL, received a non-binding buyout offer from a group comprising its CEO Jifan Gao and a private equity firm, Shanghai Xingsheng Equity Investment & Management Co., Ltd.
The group, also including the subsidiary of Industrial Bank Co., Ltd, has placed an offer of 23 cents per ordinary share or $11.06 per American Depository Share (ADS) of Trina Solar to buy out all the shares not already owned by them. This bid values Trina Solar at approximately $985 million.
According to the proposal, an acquisition vehicle would be formed to acquire Trina Solar and then the two would merge. The deal will likely be financed through a combination of debt and equity.
Approval of this proposal by the board of directors would make Trina Solar the 15th Chinese tech firm since April listed in the U.S. to go private.
In June, peer JA Solar Holdings Co., Ltd. JASO received a similar offer from CEO Baofang Jin and Jinglong Group to buy all the outstanding shares for $9.69 per ADS. This deal valued the company at about $489.1 million.
Despite the downturn in the Chinese stock market this year, U.S. listed Chinese firms are considering privatization and eventual enlistment in the higher value domestic market where it is easier to attract investors.
China leads the world in total electricity generated from renewable sources, backed by its increasing focus on the alternative path of late. All leading solar cell manufacturers are looking for opportunities in the emerging markets. These primarily comprise the Asia-Pacific region with China, India and Japan topping the list. The overall long-term outlook appears bright, especially since global warming and high fuel emission issues have proven how inevitable clean energy sources will be in the future.
In all probability, proceeds from the relisting will be used to develop solar farms. Post the announcement, Trina Solar has jumped 11.62% to close at $10.66 in New York Stock Exchange composite trading.
Zacks Rank
Trina Solar currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the solar space are JinkoSolar Holding Co., Ltd. JKS and ReneSola Ltd. SOL, both sporting a Zacks Rank #1 (Strong Buy).
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