SAN FRANCISCO/TOKYO (Reuters) - Japan’s Sharp Corp said on Wednesday it will buy U.S.-based developer of solar power systems Recurrent Energy for up to $305 million, stepping up efforts to expand into building solar plants.
Sharp, the world’s No.3 maker of solar cells, has tied up with Italy’s Enel to develop solar power plants in the Mediterranean region and is building a plant with a local firm in Thailand.
The purchase of Recurrent Energy will be the first acquisition by Sharp’s solar energy business, and the Japanese firm aims to gain know-how from Recurrent.
Sharp is counting on Recurrent to help it expand its business in the photovoltaic area, executive vice president for overseas business Toshige Hamano said in a statement.
That includes “extending from developing and producing solar cells and modules to developing and marketing power generation plants,” he said.
Privately held Recurrent Energy, which is majority owned by Hudson Clean Energy Partners, focuses on small-scale projects of up to 20 megawatts. It has a pipeline of more than 2 gigawatts of projects planned in the United States, Canada and Europe.
The acquisition is expected to close by the end of this year.
Sharp’s rivals, including U.S. based solar-panel makers First Solar Inc and China’s Suntech Power Holdings Co, have expanded into the project development business to supply utilities with solar power to make up for a fall in panel prices.
The projects can provide a steady flow of demand for the companies’ products.
“I can’t tell whether this is expensive or cheap shopping at this stage, but it’s a good move by Sharp as it creates a demand for its solar cells. It may also be able to gain know-how as a plant operator,” said Koichi Hariya, an analyst at Ichiyoshi Research Institute in Tokyo.
Shares of Sharp gained 1.3 percent to 857 yen outperforming a flat Nikkei average.
For Recurrent, “what this transaction is really about is providing the platform to ensure our continued growth,” Recurrent Chief Executive Arno Harris told Reuters.
Harris, who will retain his title after the acquisition, cited Sharp’s credibility and access to capital markets as offering benefits to Recurrent.
Acquisitions activity in solar energy has lagged other fields such as technology. Issues such as declining prices for solar panels and uncertainty over the fate of government subsidies in alternative energy have dampened enthusiasm for the once red-hot industry.
When Hudson purchased its majority stake in Recurrent in 2008, it said it would invest up to $75 million in the company. Hudson managing partner Neil Auerbach declined on Tuesday to provide further details on the company’s investment in Recurrent.
Other shareholders include Mohr Davidow Ventures.
Hudson is a private-equity firm based in Teaneck, New Jersey, specializing in renewable power, alternative fuels, energy efficiency and storage. Sharp is purchasing its stake.
Reporting by Sarah McBride, Poornima Gupta and Nobuhiro Kubo: Editing by Carol Bishopric and Michael Watson