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SunPower Falls After Total Completes Oversubscribed Tender

SunPower Corp. fell after Total SA’s $1.3 billion offer to purchase 60 percent of the second-largest U.S. solar panel maker was successfully completed, leaving the remaining shares to trade freely.

SunPower dropped $3.02, or 15 percent, to $17.65 in Nasdaq trading at 11:30 a.m. New York time, after sliding as much as 17 percent, the most in six weeks. Total will buy 30.2 million of SunPower’s Class A shares and 25.2 million Class B shares, for $23.25 each, according to a statement today.

SunPower surged after Total said April 28 that it would pay a 46 percent premium for its shares and has remained between $21.69 the day after the announcement and $20.67 yesterday. Today’s decline brings the price back to about the same level before the deal was made public.

“The tender has now gone through, which means there’s nothing supporting the stock,” Jesse Pichel, an analyst with Jefferies Group Inc. in New York, said in an interview. “The movement today is just a reflection of the stock catching up with its peers.”

The drop was expected, said John Hardy, an analyst with Gleacher & Co. Because Total offered to buy only 60 percent of the shares, investors had already valued the remaining shares, known as the stub, at about $16.55, he said.

“Everybody knew the stock was going to be down 15 percent today,” Hardy said. The only surprise is that the shares didn’t fall more, to the expected stub price.

Holding Onto Shares

Total offered to buy as much as 60 percent of SunPower’s Class A and Class B shares. Investors submitted 74 percent of the Class B shares outstanding and the French energy company agreed to buy 81 percent of them.

Investors agreed to hand over 52 percent of the Class A shares outstanding and Total said it may purchase additional Class A shares to reach the 60 percent level.

Hardy said some investors are holding on to their SunPower shares because they expect that Total’s backing will give the solar company a lift.

Pichel downgraded SunPower’s shares on June 8 to “hold” from “buy” and lowered his price target to $19 from $26 in anticipation of the tender’s completion.

“Yet to be determined is how the synergies from Total buying 60 percent of SunPower will pan out, and how quickly does Total help SunPower generate more business,” Pichel said.

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