Shanghai-listed polysilicon maker Tongwei says it plans to acquire 100% of Qinghai Lihao in a stock-and-cash transaction, as consolidation in China’s polysilicon sector increasingly shifts to mergers and acquisitions.
Tongwei said it plans to acquire 100% of Chinese rival Qinghai Lihao in a transaction combining share issuance and cash, in addition to a planned supporting fundraise, according to a Feb. 25 trading suspension notice.
Tongwei said the deal is at a preliminary stage. It signed a letter of intent with the proposed sellers – Duan Yong and two limited partnerships, Hainan Zhuoyue Enterprise Management Partnership and Hainan Haoyue Enterprise Management Partnership – and said the final parties and terms will be disclosed in a subsequent transaction plan or report. The company added that the transaction is not expected to result in a change of control, does not constitute a related transaction and, based on its initial assessment, is not expected to qualify as a major asset restructuring.
To avoid abnormal fluctuations in stock prices while details remain uncertain, Tongwei has suspended trading of its A-shares and related convertible bonds from the market open on February 25. The suspension is expected to last no longer than 10 trading days.
Qinghai Lihao is a private limited liability company, registered in 2021 in Xining, Qinghai Province. The business activities include electronic materials and related production and trading activities.
Industry reports describe Lihao as a fast-growing polysilicon producer that taps into Qinghai’s renewable energy resources. Public reports on the buildout indicate that a first phase of a 50,000 tonne polysilicon project was commissioned in 2022, with longer-term capacity ambitions expected to be significantly higher, although Tongwei’s suspension notice did not reveal capacity figures or a purchase price.
The move follows China’s antitrust regulator’s decision in early January to halt an industry-led effort to curb polysilicon capacity and coordinate prices. The plan involved six major producers – Tongwei, GCL, Daqo, The six companies together account for almost 2.5 million tonnes of capacity, while the rest of the industry represents approximately 700,000 tonnes.
Against this backdrop, Tongwei’s proposed acquisition of Lihao points to a market-driven consolidation path through mergers and acquisitions rather than coordinated capacity management. If completed, the transaction would place a significant portfolio of relatively new Qinghai polysilicon assets under a larger incumbent, potentially increasing capacity concentration on fewer balance sheets. However, the impact on effective supply will depend on how the combined entity manages occupancy, product mix and expansion plans.
Tongwei said further details – including valuation, definitive agreements, audit and valuation results and regulatory approvals – are still pending, and warned investors of execution risks.
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