Total $1.3 billion SunPower bid successful
PARIS (Reuters) - Oil major Total SA's $1.3 billion takeover of SunPower Corp will help the U.S. solar panel maker double its market share over the next 18 months, SunPower Chief Executive Tom Werner said on Wednesday.
Total brings the financial backing, geographical footprint and research and development expertise that will allow the fast-growing U.S. company to pursue an "aggressive" development strategy based on organic growth, Werner told Reuters.
"This transaction will allow us to be more aggressive in the succeeding years. As we look at the solar market, we expect to double our market share in the next 18 months," Werner said, estimating that its current percentage share of the booming solar market is currently in the "mid-single digits."
Werner and Philippe Boisseau, head of gas and power at Total, were speaking in an interview after announcing that shareholders representing a majority of SunPower's capital had agreed to tender their shares to the French energy group.
Holders of about 52.2 percent of Class A common stock and 74.2 percent of Class B common stock have tendered their shares in a firm and definitive offer, the companies said.
SunPower shares fell more than 15 percent after the announcement, trading at $17.53 in midafternoon, a move that Werner deemed "unsurprising" due to the number of investors who had bought shares just so they could take part in the tender.
But Kaufman Bros analyst Jeff Bencik said the stock is at risk of falling further, given the difficult market conditions in the solar industry, citing the risk that the market could be oversupplied.
The final results of the tender will be known on June 17.
SENSIBLE OR TRANSFORMATIONAL DEAL?
Total unveiled a friendly bid in April, offering to pay $23.25 a share for up to 60 percent of SunPower, in one of the biggest moves ever by an oil and gas major into the renewable energy industry.
The price represented a premium of more than 44 percent to SunPower's Class A closing share price on the day before the deal was announced.
Solar power has been one of the fastest growing energy industries in recent years, but it still remains tiny compared with oil, gas and coal because of its higher cost. According to Clean Edge research, the global market for solar photovoltaics expanded from $2.5 billion in 2000 to $71.2 billion in 2010.
SunPower, which reported sales of nearly $1 billion for 2010, expects to increase sales by more than 30 percent this year, Werner said, adding the company would update investors on its outlook following the Total deal at the end of July.
"It will probably be very early, but there will be some sense of what our plans are," Werner said.
Total will start working soon with SunPower on an investment plan, Boisseau said, adding that Total is planning to merge its photovoltaic subsidiary Tenesol with SunPower.
Werner said SunPower's ability to get its projects financed will be "increased dramatically" through the Total deal, overcoming a key issue for an industry hit by the 2008 financial crisis, which squeezed financing for new projects.
But money was not the only reason SunPower succumbed to Total's charms, Werner said.
"If you are a rapidly growing company, you need efficient access to capital, but there is more than money involved," he said, citing Total's research investments and global presence.
"There are things that make it a sensible investment and others a transformational investment. Just ask our competitors; they will say it is both."
(Additional reporting by Nichola Groom in Los Angeles; Editing by Will Waterman and Gerald E. McCormick)
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