First Solar Sees Less Dilution For Acquisition (FSLR)

First Solar, Inc. (NASDAQ: FSLR) has completed its acquisition of OptiSolar’s photovoltaic project pipeline.  The company said that it expects to construct the solar power plants developed under the pipeline over the next several years.  It also still plans to sell them to regulated utilities, diversified energy companies and other independent power producers. What is interesting is that the deal looks cheaper than when it was first announced, at least as far as shareholders and their expected dilution are concerned.

First Solar noted that the core development team responsible for assembling and executing on the solar project pipeline has also joined the First Solar development team.  OptiSolar’s project development business was acquired in an all-stock transaction valued at approximately $400 million, so First Solar is issuing approximately 3 million shares of common stock for the deal.  The company noted that this represents an estimated dilution of 3.5% to common stock, which is actually less than the 5% expected dilution that was first announced due to the price appreciation of First Solar shares.

First Solar is one of our energy stocks which we think could double by the end of next year as the recovery comes to the economy.  Its shares were at $103.97 and its market cap was listed as about $8.5 billion when this OptiSolar deal was announced.  Even with a near 4% drop today, shares are at $132.50 and the market cap is about $10.8 billion.

JON C. OGG
April 3, 2009