Solar firms attractive, but elusive

Solar firms attractive, but elusive

But finding a good company in the sector that is also available is not proving to be easy. The nuclear disaster at the Fukushi-ma Daiichi plant in Japan in the aftermath of an earthquake and tsunami in March and Germany's subsequent decision to pull out of nuclear power completely have given extra impetus to the . arguments in favour of renewable energy.

Observers have been predicting a takeover spree for years, but buying into the green energy boom is difficult, since many of the most attractive companies in the solar sector are part-owned by their founders or chief executives, making direct takeovers tricky.

Nevertheless, in April it appeared that the starting gun had been fired: The giant French energy group Total made a landmark $1.4 billion offer for a majority in the U.S. company Sun-Power; and the Swiss solar equipment maker Meyer Burger bid €356 million, or $504 million, for a German rival, Roth & Rau.

In May a survey carried out by the consulting firm KPMG showed that a third of investors and executives in the renewable energy sector were planning to make investments in the solar industry over the next 18 months.

The solar industry presents a rich hunting ground for utilities and industrial conglomerates, given the range of attractive takeover targets. In contrast to the wind energy sector, the solar industry is still considered young, even exciting, and hence it is still just at the beginning of its consolidation process.

But the story of the solar industry is also one of founders and pioneers who want to hold on to their companies in the current boom. So any potential acquirers would have to bring their full powers of persuasion to bear.

“It’s an industry where real entrepreneurship played a very important role,” said Michael Tappeiner, an equity analyst at UniCredit in Munich. “These are real entrepreneurs that have built their companies under their own steam and they know their products in and out.”

Germany, the world's largest solar market by sales, is full of leading edge companies that would make attractive additions. The two biggest, and probably most attractive, companies also have very protective owners who have established solid defenses against possible hostile takeovers by limiting the number of shares that are available to buy.

Frank Asbeck, founder and chief executive of SolarWorld — at €1.1 billion, the second-largest German solar company by market value after SMA Solar — is a case in point. Known to some as the "sun king," as much for his outgoing nature as his most recent career choice,  Asbeck first made headlines in late 2008 when he attempted to take over the German factories of the General Motors Opel unit.

Now he owns 27.8 percent of Solar-World and he said this month that selling his stake was “out of the question.” Centrotherm, another German company and the world's No. 2 solar equipment maker behind Applied Materials of the United States, has been holding up well during the intense pricing pressure that has hit the industry, thanks to strong demand from Asia. The company made its first-ever dividend proposal this year.

More than half of the company's voting rights are held by its chief executive, Robert Hartung, who is also a majority shareholder of TCH, which in turn holds 50 percent of Centrotherm's shares. His father, Rolf Hartung, holds a 15 percent stake in TCH.

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