One Small Solar Merger Could Trigger More Solar Mergers (WEST, FSLR, SPWR, LDK, WFR, TAN)

Energy

Published: May 9, 2012 8:04 am

Last Updated: April 28, 2020 3:10 am

Westinghouse Solar, Inc. (NASDAQ: WEST) may have some good news for the entire solar sector. The company has announced a merger agreement between it and CBD Energy Ltd. (ASX: CBD). The agreement is a share swap and has been approved by the boards of directors of both companies. Westinghouse is targeting a third quarter of 2012 closing period after a shareholder vote. While this was barely a $6 million company, this could be one of those issues which carry over into other solar companies.

Westinghouse Solar is a designer and manufacturer of integrated rooftop solar power systems, and CBD is an Australian diversified renewable energy company. Margaret Randazzo is currently the CFO of Westinghouse Solar and she was also appointed Interim CEO as former CEO Barry Cinnamon is leaving the company. CBD anticipates that it will shift to a U.S. listing upon the closing of the merger and it plans to list its common shares on that NASDAQ.

The press release noted that the initial meetings about a merger took place in December of 2011. It is now May and we cannot help but to wonder whether or not other solar companies have considered mergers. Here are two of the easy observations in the broader solar sector:

First Solar, Inc. (NASDAQ: FSLR) is now at all-time lows and has remained profitable so far despite shares being down 90% from last year’s highs. It is now only worth about $1.4 billion and it would be considered a busted IPO if the move happened faster.

SunPower Corporation (NASDAQ: SPWR) is already majority-owned by Total SA (NYSE: TOT) and it trades at about 75% under where Total took its stake of almost $1.4 billion. The entire market cap including the majority stake held by Total is only $628 million.

LDK Solar Co., Ltd. (NYSE: LDK) is in China and now only worth $360 million. There have been takeover rumors before in this name but the China base and woes in China right now probably make it difficult for a non-Chinese player to acquire the company.

MEMC Electronic Materials Inc. (NYSE: WFR) is a name which used to come up regularly in the takeover rumor category, although it has been so battered that getting approval might be impossible after 95% losses from the peak. It is now worth only about $764 million in market cap.

We would note that Energy Conversion Devices was also always a ‘merger rumor name’ in solar but it went bankrupt. There is no assurance that other solar mergers are on the horizon, but these companies might want to start thinking about stock mergers which could still give holders upside if the combined companies turn around and thrive again.

To show just how bad things are, the Guggenheim Solar (AMEX: TAN) ETF trades at $21.09 and it has lost one-third of its value since its reverse split.

Westinghouse shares closed at $0.40 and its 52-week trading range is $0.26 to $2.75. The market value was only $6.66 million as of Tuesday’s close.

JON C. OGG

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