Korea’s LG Electronics (066570.KS) and Conergy AG (CGY.DE) have signed a memorandum of understanding to form a joint venture in the solar module manufacturing business. LG would acquire a 75% stake in Conergy’s solar module plant in Frankfurt (Oder), under the deal, and Conergy would retain 25%. The plant is currently in the ramp-up phase.
LG and Conergy project that their partnership would get underway by the end of this year.
LG will bring to this deal its R&D knowledge, including several years of R&D in various photovoltaic technologies. LG will also leverage its leading expertise in mass manufacturing from similar industries such as flat panel displays.
Conergy, as a leading PV solution provider, will provide the joint venture with access to the market through its distribution franchise that spans across over 20 countries on five continents.
The joint venture with Conergy provides LG a unique opportunity to make a swift and effective entry into the solar industry, with a leading downstream company as its partner.
"This is an opportunity for us to take the lead in the solar technology market right from the start. Contributing our technology and operational expertise to the joint venture allows us to enter the industry much faster and with better valuations than would simply acquiring a standalone solar module manufacturer," said Kwan Shik Cho, head of the Solar Cell Business Team at LG Electronics. "In addition, this partnership provides us with the strategic advantage in that we gain Conergy–the leading global downstream player–as a long term partner."
For Conergy, the joint venture is a step further on its road to becoming a focused downstream company. The Strategic partnership would also secure Conergy’s technological lead and future supply of solar modules and help pave the way to profitable growth.
"In taking this step, we have created the opportunity for a long-term partnership with LG Electronics. This strategic alliance will also help us further develop into a leading provider within the photovoltaic market," said Dieter Ammer, CEO of Conergy. "This would also mean moving significantly further in our realignment program, with a clear focus on downstream activities."
In November 2006, Conergy started construction of its plant in Frankfurt (Oder), which ranks among the most modern of its kind and employs more than 400 staff. Conergy will supply the plant with silicon deliveries and will take over the principal role of future marketing of the modules. The MOU is non-binding.
Signing of the transaction is subject to satisfaction of certain conditions and closing is anticipated by year end. Morgan Stanley is advising LG Electronics and Jefferies is advising Conergy in the transaction.
In related news…
Conergy has sold its wind turbine generator business to Warburg Pincus, as the company reorganizes to focus on downstream photovoltaic products and services. Financial terms were not disclosed, but Conergy said the sale will result in a one-time, largely non-cash write-off of approximately 35 million euros from discontinued operations.
About Conergy
Since its founding in 1998, Hamburg-based Conergy AG has sold more than a gigawatt in renewable energy, making it one of the biggest European suppliers of solar energy and other renewable energies, and a world leader in solar system integration. Of the one gigawatt in renewable energies, Conergy has installed more than 400 megawatts in its major projects, Of the total one gigawatt, 200 megawatts falls to its wind energy park projects and 800 to its globally marketed solar modules. According to the German Solar Industry Association (BSW) this is just under a fifth of the entire installed photovoltaic output in Germany. Calculative one in ten modules worldwide was produced, sold or installed by Conergy.
About LG Electronics, Inc.
LG Electronics, Inc. is a global leader and technology innovator in consumer electronics, home appliances and mobile communications, employing more than 82,000 people working in 114 operations including 82 subsidiaries around the world. With 2007 global sales of USD 44 billion, LG is comprised of four business units–Mobile Communications, Digital Appliance, Digital Display and Digital Media. LG is the world’s leading producer of mobile handsets, flat panel TVs, air conditioners, front-loading washing machines, optical storage products, DVD players and home theater systems.
Loading...