Bosch to buy Ersol, galvanizing solar sector

FRANKFURT (Reuters) - Robert Bosch GmbH ROBG.UL plans to buy Germany's Ersol ES6G.DE for around 1.08 billion euros ($1.67 billion) in a deal that electrified solar stocks on Monday on expectations of more bids for "green" energy groups.

Unlisted Bosch, the world's biggest automotive supplier, has agreed to buy 50.45 percent of Ersol from Ventizz Capital for 546.4 million euros and intends to make the same cash offer of 101 euros per share for the rest, Bosch and Ersol said.

The 101 euros per share price, a 63 percent premium to Ersol's closing price on Friday, is 21.4 times Ersol's projected 2009 earnings per share, according to Reuters Estimates. Ersol shares shot up to 100.85 euros by 0845 GMT.

Ersol makes solar cells at its four production plants in Germany and California, and also has a joint venture in China. Its sales leapt 25 percent to 160 million euros last year.

Bank Sal. Oppenheim said in a note to clients: "We see this as the boldest move so far in what we see as the start of a consolidation process in the solar industry."

"In particular, we see companies from mature industries such as the automotive or the semiconductor industry bringing process know-how to the solar industry," it added.

Raw materials firms could also seek more downstream exposure by snapping up companies like REC (REC.OL) or Q-Cells (QCEG.DE), it said, while utilities and power station builders may eye Solon (SOOG.DE), Centrosolar (C3OG.DE) or Aleo (AS1Gn.DE).

Growing demand and state subsidies for renewable energy have been a boon for solar companies, but the industry is reaching a crucial stage as manufacturing capacity expands and shortages of solar-grade silicon -- a key ingredient -- start to ease.

Conergy (CGYG.DE), a German peer of Ersol, raised emergency capital early this year to escape a liquidity squeeze after it found it could not generate cash fast enough to finance its ambitious growth plans. It is now scaling back operations.

Bosch said its planned to publish its takeover offer within six weeks. Ersol said its management welcomed the deal.

Ersol Chief Executive Claus Beneking told Reuters the deal would help it finance investments to expand capacity and develop new technology, adding no big job cuts were needed.

KNOCK-OUT BID

Bosch, which manufactures a wide range of items from car parts to washing machines and power tools, said the Ersol deal reflected its strategy to expand in the renewable energy sector.

"In the past, Bosch has successfully marketed various technologies for the utilization of renewable energy. Ersol Solar Energy AG with its present focus and products is a good match for Bosch Group," a statement said.

Bosch Chief Executive Franz Fehrenbach had said in February he wanted to raise spending on acquisitions in 2008, taking advantage of the company's strong cash position, while rivals may be constrained by a global credit crunch.

Analysts generally saw the Bosch offer as a knock-out bid that was unlikely to be contested or sweetened.

Other German solar companies rallied on the news.

Solon (SOOG.DE) advanced 8.8 percent, Conergy 6.2 percent, Solarworld (SWVG.DE) 5.4 percent, Q-Cells (QCEG.DE) 2.5 percent and Phoenix Solar (PS4G.DE) 6.4 percent.

Q-Cells trades at nearly 25 times expected 2009 earnings per share, according to Reuters data, while Solarworld is valued at 21 times 2009 EPS.

Solar companies saw their share prices skyrocket last year but many plunged early this year on concern that valuations had got out of hand.

The solar power industry uses the same silicon raw material as the semiconductor industry -- although solar panel makers need less purified supplies -- and may share a similar boom-bust path, some analysts say.

Skeptics point out that high profits plus low barriers to entry have attracted new manufacturers from China and that the prospect of serious over-capacity looms even though solar power now generates less than 0.1 percent of the world's electricity.

The sector depends heavily on state subsidies that help curb emissions of carbon dioxide in the fight against climate change, fuelling a boom especially in market-leading Germany.

Germany will scale back subsidies from next year.

(Additional reporting by Sylvia Westall)