A Chinese company owned by a billionaire property developer amassing a clean-energy empire has agreed to buy a controlling stake in Georgia’s homegrown solar success story.
Shunfeng International Clean Energy Ltd., based in Changzhou, China, and listed on the Hong Kong Stock Exchange, is set to pay $57.8 million for a 63.13 percent stake in Norcross-based Suniva Inc., which also has its flagship factory making high-efficiency solar cells and modules in Gwinnett County.
Shunfeng is owned by Zheng Jianming, a property tycoon and investor worth an estimated $1.9 billion whose Asia Pacific Resources Development holding company has acquired billions of dollars in clean energy assets over the last two years.
In announcing the deal, Suniva revealed plans to create 300 new jobs by boosting manufacturing capacity in U.S. to 400 megawatts, up about 8 percent from 370 MW today, according to PV Magazine. Suniva currently employs about 350 people. The company didn’t say whether the new jobs would be located in Georgia, in its newer, larger plant in Saginaw Township, Mich., or spread across both. The partners are planning an eventual ramp-up to 1 gigawatt of capacity, they said. Suniva executives weren’t immediately available for comment.
Suniva moved all panel production back to the U.S. from Asia over the past few years, partly to qualify for government contracts with “Buy America” provisions that are driving much of the industry’s expansion in the U.S. A recent Suniva deal included the sale of modules to the Michigan Army National Guard’s Ft. Custer, and last year, the seven-year-old firm received a $2.3 million grant from the federal government to develop even higher-efficiency cells.
Shunfeng saw the acquisition as attractive for gaining a foothold in the U.S., according to documents filed in Hong Kong.
The merger “could further strengthen the Company’s global position in high-efficiency cells manufacturing at affordable costs, and more importantly enable the Company to reap the huge potential of the solar market in the United States,” according to the filing.
Shunfeng, which operates subsidiaries in clean energy around the world, also hinted that Suniva’s know-how would become part of its global manufacturing system. Suniva has long said its cells boast the highest rates of photovoltaic energy conversion while being relatively inexpensive to manufacture. The company claims its 19 percent conversion rate is a record in the industry.
Shunfeng last February purchased Wuxi Suntech Power Co., which was once reportedly the largest solar cell manufacturer in the world. Bloomberg reported in June that Shunfeng was seeking acquisitions in the U.S. and Asia to support a plan to boost Suntech’s production by 1 gigawatt.
At today’s (recently devalued) Chinese yuan rates, Shunfeng made $203 million in profit on $891 million in sales in 2014, according to its annual report.
According to Shunfeng’s filing, Suniva cut its losses from $44 million in 2013 to $15.5 million last year, at which point it had assets valued at $74.5 million. Shunfeng will pay for the 63 percent stake with a combination of $12 million in cash and 71 million newly issued shares in Hong Kong.
In an interview last year with Global Atlanta, Suniva pointed to the strength of the market in the U.S., rather than tariffs slapped on Chinese-assembled panels by the U.S., as its main reason for moving production back to the states. Using Suniva’s factories, Shunfeng would avoid that added cost in tapping the U.S. market. Suniva will keep its brand in the U.S., CEO Eric Luo told Bloomberg in an interview.
More Chinese Acquisitions to Come?
The Suniva deal illustrates a growing trend of Chinese investors acquiring U.S. firms for their manufacturing capabilities and market access.
Global Atlanta recently spoke with John Ling, new director of Georgia’s China office, about the potential of attracting more merger-and-acquisition activity from China.
He said many Chinese companies approached him in his previous role in South Carolina for help finding acquisition targets but that states are more interested in attracting job-creating investments.
“To me personally, without any state policies, I can see that in certain situations it makes great sense from economic development perspective, but it probably has to be evaluated on a case-by-case basis,” he said.
Scott McMurray, director of the Georgia Department of Economic Development’s Global Commerce division, said the state wouldn’t be in the business of sourcing deals for private investors, instead coming in when “net new jobs” are on the table.
“If it’s just a name change on the door, we wouldn’t get involved,” Mr. McMurray said.