LG Electronics & Conergy Sign MOU For Strategic Joint Venture In Solar Module ProductionSeptember 10, 2008 by Jeff Shepard
LG Electronics (LG) and Conergy AG announced that they have signed a memorandum of understanding (MOU) to form a joint venture in the solar module manufacturing business.
LG would acquire a 75% stake in Conergy’s solar module plant in Frankfurt (Oder), under the deal, and Conergy would retain 25%. The plant is currently in the ramp-up phase. LG and Conergy project that their partnership would get underway by the end of this year.
According to the companies, LG will bring to this deal its extensive R&D knowledge, including several years of R&D in various photovoltaic technologies. LG states that it will also leverage its leading expertise in mass manufacturing from similar industries such as flat panel displays. It is stated that Conergy will provide the joint venture with unparalleled access to the market through its distribution franchise that spans across over 20 countries on five continents.
"This is an opportunity for us to take the lead in the solar technology market right from the start. Contributing our technology and operational expertise to the joint venture allows us to enter the industry much faster and with better valuations than would simply acquiring a standalone solar module manufacturer," said Kwan Shik Cho, head of the Solar Cell Business Team at LG Electronics. "In addition, this partnership provides us with the strategic advantage in that we gain Conergy – the leading global downstream player â€“ as a long term partner."
"In taking this step, we have created the opportunity for a long-term partnership with LG Electronics. This strategic alliance will also help us further develop into a leading provider within the photovoltaic market," said Dieter Ammer, CEO of Conergy. "This would also mean moving significantly further in our realignment program, with a clear focus on downstream activities."
In November 2006, Conergy started construction of its plant in Frankfurt (Oder). Conergy will supply the plant with silicon deliveries and will take over the principal role of future marketing of the modules.
The MOU is non-binding. Signing of the transaction is subject to satisfaction of certain conditions. Closing is anticipated by year end.