Suntech Power has signed a definitive agreement to acquire MSK Corporation in a two-step cash and stock transaction. In the first step of the acquisition, which is expected to close in the third quarter 2006, Suntech will acquire a two-thirds equity interest in MSK for $107 million through a combination of subscription to new shares and purchase of existing shares. The balance of the consideration is based upon revenue targets for MSK and will be paid in the second step, which is anticipated to close by the end of 2007.
“While Japan is the world’s largest single market for PV modules, it is also one of the most difficult markets for foreign players to enter,” said Dr. Zhengrong Shi, Suntech’s Chairman and CEO. ”We anticipate that this acquisition will give Suntech the advantage of MSK’s nationwide sales and marketing platform in Japan, which we expect to leverage to grow our market share in this important market.”
MSK Corporation is one of Japan’s largest PV manufacturers and one of the top-ranking companies in the building-integrated photovoltaics (BIPV) space. MSK provides customer-tailored PV products that give aesthetic finish to a building by replacing the conventional building materials. In addition, MSK provides turnkey solutions to its clients. Its services range from pre-system preliminary studies through to post-installation commissioning and maintenance. With more than 20 years of experience, MSK currently has approximately 260 employees, leading technical expertise and one of the world’s largest PV module manufacturing plants with a production capacity of approximately 100 megawatts in Nagano, Japan. In 2005, MSK had annual production capacity of approximately 200 megawatts.
“Through this acquisition, Suntech will also gain the advantage of MSK’s leading BIPV product and solar system design capability,” continued Dr. Shi. “This acquisition will bring two important companies in different PV sectors together and we anticipate that it will result in great synergies. It will enable us to accelerate innovation, bring to market new PV solutions that complement our existing product range, and capture new opportunities within the fast growing BIPV market.”
Dr. Tadao Kasahara, CEO of MSK, said, “MSK looks forward to continuing to provide commercial and industrial solar solutions to Japan and markets in other parts of the world with both advanced building integrated photovoltaics (BIPV) and other high-quality PV products. As a subsidiary of Suntech, MSK will be able to access Suntech’s support in terms of advanced PV cell/module products and cost competitiveness, financial resources, and distribution channels, as well as have the possibility of pioneering BIPV applications in the Chinese market.”
Suntech expects that MSK’s global sales footprint, established branding and international marketing expertise will further Suntech’s strategy of diversifying its customer base and developing sales channels in key international markets. MSK’s CEO, Dr. Tadao Kasahara, has agreed to remain in his current role for at least four years.
Under the definitive agreement, Suntech will be acquiring MSK in two steps. Upon closing of the first step of the acquisition, which is expected to occur in the third quarter of 2006, Suntech will acquire a two-thirds equity interest in MSK for $107 million in cash. Upon closing of the second step of the acquisition, which is expected to occur by the end of 2007, Suntech will acquire all or a substantial portion of the remaining interest in MSK for a consideration based on MSK’s ability to achieve certain revenue targets.
If Suntech acquires 100% of the remaining interest in MSK, the range of consideration for the second step is $53 million to $193 million in the form of Suntech shares. The first step of the transaction will be financed through a one year bridge loan. The transaction is subject to customary closing conditions, including approval of MSK’s shareholders. The transaction is not subject to regulatory approvals.
Credit Suisse acted as exclusive financial advisor and Simpson Thacher & Bartlett LLP served as international counsel for Suntech on the transaction. PT Global and Mitsubishi UFJ Securities acted as exclusive financial advisors and O’Melveny & Myers LLP served as international counsel for MSK on the transaction.
Loading...