Hanwha SolarOne and Q CELLS Merger and Create Solar Power Leader
Hanwha SolarOne Co., Ltd. (SolarOne), Hanwha Solar Holdings Co., Ltd. (HSH) and Hanwha Q CELLS Investment Co., Ltd. (Q CELLS) announced a definitive share purchase agreement to create a new global leader in solar power. The combined business will be the largest manufacturer of solar cells with capacity of 3.28 gigawatts and will have a broader international footprint covering the largest and fastest-growing solar markets in the world. Under the terms of the agreement, SolarOne will acquire 100% of the outstanding share capital of Q CELLS from its sole shareholder, HSH, in an all-stock transaction with an implied enterprise value of the combined company at approximately $2.0 billion based on the closing price of SolarOne's American depositary shares (each of which represents five ordinary shares of SolarOne) as quoted by NASDAQ on December 5, 2014 (the last trading day prior to this announcement). The transaction was approved by the board of directors of both companies and is expected to close in the first quarter of 2015, subject to shareholder and regulatory approvals.
Mr. Seongwoo Nam, chief executive officer of SolarOne, 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."
Mr. Charles Kim, chief executive officer of Q CELLS, said, "Q CELLS' commitment to quality, technology, and innovation has enabled us to become one of the most respected solar companies with a world-renowned product reputation and downstream expertise. The merger with SolarOne creates a truly global platform that will provide us with a platform to achieve greater economies of scale and facilitate expansion into important solar markets including China. Together with SolarOne, we look forward to delivering superior solar solutions to our customers and growing our global leadership position."
SolarOne is currently one of the world's largest solar wafer, cell and module makers with operations and manufacturing centered in China and more than 7,500 employees across China, Germany and the United States. The business has a cell and module production capacity of 1.75 and 2.07 gigawatts, respectively, and serves customers in Japan, China, the United States, Korea, Canada, the United Kingdom, South Africa and Germany.
Acquired by Hanwha Group in 2012, Q CELLS is the largest supplier of photovoltaic product solutions in Europe (based on global shipments in 2014 year-to-date), and has almost 1,800 employees in Germany and Malaysia. The Q CELLS brand is widely recognized in the industry for its high quality solar cells and modules, system solutions and complete power plants, with a cell and module manufacturing capacity of 1.53 gigawatts and 130 megawatts, respectively. Q CELLS serves customers through its international sales network covering Germany, Malaysia, Japan, the United States, Korea, France, Chile and Australia. Q CELLS generated approximately $416.1 million in revenue based on unaudited IFRS financial information for the six months ended June 30, 2014.
Based on the unaudited financial information for each of SolarOne and Q CELLS for the six months ended June 30, 2014 (and after adjusting for approximately $49 million of intercompany transactions), the total revenue for the two companies was approximately $733 million. More financial information for the combined companies will be provided in the shareholder circular, which SolarOne expects to be prepared and mailed to SolarOne's shareholders before the end of December 2014, which will also be filed with or furnished to the U.S. Securities and Exchange Commission.
Seongwoo Nam of SolarOne will lead the combined business as chairman and chief executive officer, DK Kim will serve as chief commercial officer, Jinseog Choi will serve as chief technology officer and Jay Seo will become chief financial officer. The combined company's executive headquarters will be located in Seoul, Korea, and its technology and innovation headquarters in Thalheim, Germany.
SolarOne's board of directors, acting upon the unanimous recommendation of the special committee formed by its board of directors, approved the share purchase agreement for the transaction and resolved to recommend that SolarOne's shareholders vote to approve the transaction. The Special Committee, which is comprised solely of independent directors of SolarOne who are unaffiliated with Q CELLS, Hanwha Solar Holdings Co., Ltd. ("HSH"), Hanwha Chemical Corporation or any of the management members of SolarOne, negotiated the terms of the purchase agreement with the assistance of its financial and legal advisors.
According to the terms of the transaction, SolarOne will issue approximately 3.7 billion SolarOne ordinary shares (being the equivalent of approximately 740.2 million American depositary shares) to HSH in exchange for the transfer of 100% of the outstanding share capital of Q CELLS by HSH to SolarOne. The new shares to be issued by SolarOne to HSH in the transaction represent approximately 8.09 newly issued shares for each of SolarOne's currently outstanding shares on a fully diluted basis. If consummated, the transaction would result in HSH increasing its ownership of SolarOne from approximately 45.7% to approximately 94%, in consideration of HSH'S transfer of full ownership of Q CELLS to SolarOne. Based on SolarOne's December 5, 2014 closing share price, the implied equity value for Q CELLS is approximately $1.2 billion.
The transaction is subject to approval from SolarOne shareholders in addition to regulatory approvals and other customary closing conditions.
