Total SA, a French oil and gas giant company, agreed to buy the majority stakes of SunPower Corporation, a United States solar maker, for up to $1.38 billion to capitalize on the growing renewable energy industry. Total, one of Europe’s largest oil producers, acquired 59.35 million shares of SunPower’s outstanding Class A and B common shares at $23.25 each on Wednesday, totalling to 60 percent of the total stakes.
Under the agreement, Total will soon open this tender offer, and provide SunPower with $1 billion worth of credit to be disbursed over the next five years.
“We established partnerships with innovative start-up companies, notably in the United States, but were still looking for a strong strategic partner to allow us to achieve our ambition in the solar industry,” said Total’s president Philippe Boisseau.
Total is also a large minority shareholder in United States companies like Konarka, a developer of organic solar technologies, and AE Polysilicon, a manufacturer of new solar polysilicon.
“The solar industry will be led by worldwide integrated companies that are present throughout the entire solar value chain,” he said, adding that with SunPower, Total’s renewable energy portfolio will pick up in the solar energy market.
While over half of SunPower’s board seats now belong to Total, Mr. Boisseau said the current management will continue to operate the company.
Tom Werner, chief executive officer of SunPower, said the venture will help expand its market access to the 130 countries where Total is currently operating.
This venture is expected to increase the company’s chances of accessing credit from other financial institutions, which in turn, helps reduce the cost of capital in producing solar products.
A lower cost will then make SunPower’s products competitive in the solar market.
Moreover, it will also reduce SunPower’s $400 million worth of restricted cash, which has been saved as a cushion for payment to lands used as collaterals.
With this venture, SunPower’s first quarter results is forecasted to reach $450 million.