China-based solar power developer Zhenfa Energy Group Co. Ltd. has taken a 51% stake in STR Holdings Inc., a Connecticut-based provider of encapsulants to the photovoltaic module industry. The deal is worth approximately $21.7 million.
The Zhenfa group of companies includes a privately held solar engineering, procurement and construction company that designs, installs, owns and operates utility-scale PV power plants primarily in China. Under terms of the agreement, Zhenfa will assist STR with its operations in China, including:
- Assistance with the marketing, sales and distribution of the company's encapsulant products to Chinese solar module manufacturers;
- Providing the company with a manufacturing facility in China on favorable terms;
- Help with obtaining incentives, tax abatements or other tax benefits;
- Securing raw materials from Chinese suppliers favorable on terms and conditions; and
- Help with hiring, training and developing its workforce in China.
‘We expect to benefit greatly from Zhenfa's long-standing presence, key position as a major purchaser of solar panels and well-respected reputation in the region,’ says Luke A. Strzegowski, STR's global director of sales and technology.
STR says that in an effort to provide equal treatment to all its stockholders, the transaction has been structured to be economically equivalent to Zhenfa acquiring shares of common stock at $1.60 per share, which represents a 23% premium to the average closing stock price of $1.30 per share for the ten-day period ended Aug., 8, 2014. All stockholders other than Zhenfa will receive a special dividend of $0.85 per share. The transaction is expected to close during the fourth quarter of this year, pending regulatory and stockholder approvals.
‘As a purchaser and end user of a great number of solar panels, Zhenfa believes that our investments in solar power stations will benefit from the inclusion of STR encapsulants,’ says Zha Zhengfa, chairman of Zhenfa. ‘Our investment in STR recognizes its pioneering work in the encapsulant field over the last 40 years, as well as its steadfast innovations to maintain quality leadership in the current market.’