SMA Solar Technology AG will sell 20 percent to Danfoss A/S as Germany’s biggest solar company by market value seeks a research, procurement and sales partnership with the Danish group.
Danfoss will pay 43.57 euros a share, a 50 percent premium to the volume-weighted average price of the last 60 days, amounting to 302 million euros ($415 million), Nordberg-based Danfoss said today in a statement. SMA will take over the solar inverter business of Danfoss, the Niestetal-based company said.
SMA shares climbed as much as 13 percent in Frankfurt to 46.60 euros, the highest in two years.
“SMA will increase the attractiveness of its product portfolio and its ability to serve important solar markets,” such as China, the U.S. and Europe, “especially in the segment of medium-sized photovoltaic installations,” the company said. “The strategic partnership shall enable SMA to benefit from the experiences of Danfoss in the area of automated drives in particular by further cost reductions.”
SMA, the biggest producer of inverters used in power distribution, said in July it would cut jobs and reduce costs in a bid to counter falling sales in Europe that would probably lead to a 2013 loss. It expects sales to improve to as much as 1.3 billion euros this year even as price pressure accelerates amid subsidy cuts in Europe. SMA is scheduled to publish full-year earnings on March 27.
The partnership will unlock a procurement savings potential “in the double-digit million-euro range a year” for both companies combined as they can jointly purchase, Pierre-Pascal Urbon, SMA’s chief executive officer, said today in an interview. The savings can be reaped starting in 2015 at the earliest, he said by phone. SMA is not planning any additional transactions, Urbon said.
“With the strong cooperation between Danfoss, as a leading specialist in the field of drives, and SMA, with a unique positioning in the solar-inverter market, both companies will create one of the world’s largest converter alliances,” Danfoss CEO Niels Christiansen said in the statement.
Danfoss and several SMA shareholders will today sign the share-purchase agreement if public authorities agree and the “strategic partnership” between SMA and Danfoss is implemented, SMA said. Danfoss will not be allowed to buy or sell more shares for two years, the companies said.
Inverters are used to convert energy from solar panels into power that can be transmitted on an electricity grid.