Solar Stocks Rise After LDK Agrees to Buy Germany’s Sunways

Solar stocks gained after LDK Solar Co., China’s second-largest panel maker, agreed to buy Sunways AG (SWW) of Germany, the first acquisition by a Chinese solar company in the world’s largest photovoltaic market.

Bloomberg Global Leaders Solar Index of 37 companies rose 3.7 percent, the most in two weeks, led by a 7.9 percent gain in Hanwha SolarOne Co. (HSOL)

LDK offered to purchase Sunways, a solar-cell and module maker, for about 24.2 million euros ($31.4 million). A record 7,400 megawatts of solar capacity was installed in Germany in 2010. The two companies said yesterday the deal is expected to close by the end of the first quarter.

“We’re moving into a phase in the industry’s development where we’re going to see increased M&A,” Alex Morris, an analyst at Raymond James & Associates Inc. in Houston, said in an interview. “We’re in an oversupplied market right now, and some of these guys need to be taken out just to take some capacity off the table.”

Hanwha SolarOne rose 8 cents to $1.06 at the close in New York. Trina Solar Ltd. (TSL) climbed 7.3 percent to $7.17, its biggest gain since Dec. 20.

German Chancellor Angela Merkel will host French President Nicolas Sarkozy in Berlin next week to prepare for the European council meeting on Jan. 30. Merkel said on Jan. 1 that she will “do everything to strengthen the euro.”

“Signs of stability in Europe may be considered a positive for the industry,” Daniel Ries, an analyst at Collins Stewart LLC in New York, said by telephone. “If the euro were to collapse this year, that would be very harsh for the solar industry, with the largest demand pool still in Europe.”

To contact the reporter on this story: Justin Doom in New York at jdoom1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.