Tongwei, a vertically integrated solar manufacturer in China, has signed a “capital increase agreement” with China-based module maker Runergy, its major shareholders, and Chinese state-owned investment management company Jiangsu Yueda Group.
The deal outlines a multi-step acquisition process. Initially, Jiangsu Yueda will inject CNY1 billion ($139.7 million) into Runergy. Tongwei will then conduct due diligence, audits and valuations before completing the capital increase, which involves the acquisition of the company.
The plan involves using self-raised or borrowed funds to invest in Runergy and also buy the shares acquired by Jiangsu Yueda, with the aim of securing at least 51% of Runergy’s equity. The total acquisition cost is limited to CNY 5 billion.
Runergy, a major independent solar cell manufacturer, was among the top three global solar cell suppliers from 2020 to 2022 and was in the top five in 2023, according to InfoLink Consulting. Although Runergy has expanded into upstream and downstream sectors such as polysilicon, wafers and modules, solar cells remain its core business, accounting for more than 99% of sales from 2020 to 2022.
Runergy previously planned to raise CNY4 billion through an initial public offering on the Shenzhen Stock Exchange’s Growth Enterprise Market (GEM) to fund capacity expansion and working capital. Despite receiving approval from the China Securities Regulatory Commission (CSRC) in June 2023, the company did not complete the listing process within the one-year validity period.
In light of falling prices and underperformance in the photovoltaic sector, both the Chinese government and the China Photovoltaic Industry Association (CPIA) have encouraged mergers and acquisitions to promote healthier development of the industry.
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