2nd UPDATE: First Solar To Buy NextLight For $285 Mln
NEW YORK (Dow Jones)--First Solar Inc. (FSLR) said it will buy NextLight Renewable Power LLC for about $285 million, the latest move by a solar panel maker to expand into project development in a search for more customers.
NextLight develops utility-scale solar projects in the southwestern U.S. With the purchase, First Solar adds to its position in the U.S., which is expected to grow into one of the world's largest solar markets.
Faced with competition and growing panel supplies from Chinese solar firms, companies such as First Solar and U.S. rival SunPower Corp. (SPWRA) have started acquiring project developers, which build solar plants for utilities and businesses.
The acquisitions provide a reliable market for panels and helps solar firms expand their businesses into new countries when government subsidies begin spurring demand.
Last year, First Solar purchased OptiSolar for $400 million in stock. The purchase provided First Solar with ownership of a 550-megawatt solar farm that OptiSolar planned to build in California and 1,300 MW of solar plants under development throughout the southwestern U.S.
With the acquisition of NextLight, First Solar reels in a 1,100 MW project pipeline made up of 570 megawatts under signed purchase agreements with Western utilities and 530 megawatts of additional photovoltaic projects in various stages of development.
"NextLight has assembled a project pipeline that very much complements First Solar's project portfolio," said First Solar Chief Executive Rob Gillette. "We are looking forward to having the highly experienced NextLight team join First Solar."
The deal is expected to be completed in the third quarter.
First Solar sells thin-film solar photovoltaic panels, which are cheaper but less efficient than traditional panels made from crystalline-silicon. The company has focused on expanding in the U.S. and China, as the government in Germany, currently the world's largest market for solar, is planning to begin reducing its lucrative subsidies.
Germany accounted for 65% of First Solar's sales last year.
Lately, First Solar has been shuffling its assets; in November it sold one of its California solar farms to independent power producer NRG Energy Inc. (NRG) and bought a solar project development pipeline from Edison Mission Group in January.
Solar panel makers have suffered over the past year. Panel supply has outpaced demand as the recession and tight credit markets stalled the financing for many projects. But the coming subsidy cuts in Germany, expected later this year, have boosted sales recently as customers scramble to complete projects before the new rules take effect.
Barclays analyst Vishal Shah said the NextLight acquisition improves First Solar's prospects for 2011, as many of NextLight's projects are "ready to construct" and have low development risk.
With the additional project pipeline, First Solar "may now consider playing offense versus being vulnerable to Chinese capacity expansion," Shah said in a client note.
In February, First Solar said its fourth-quarter profit climbed due to better-than-expected revenue growth that more than offset lower margins. First-quarter results are due after the bell Wednesday.
Shares of First Solar were recently up 0.6% to $129.10. The stock has fallen 5.2% so far this year and remains well below highs above $200 last May. |
