Sharp to sell US solar business to Canadian firm for $250 mn

Just four years after acquiring the business, Japanese electronics giant Sharp Corp is planning to sell its US solar subsidiary Recurrent Energy to Canadian Solar for approximately $250 million, Nikkei Business Daily reported yesterday.

Sharp bought Recurrent Energy in 2010 from California-based venture investor Mohr Davidow Ventures and New Jersey-based private equity firm Hudson Clean Energy Partners for $305 million (See: Sharp to acquire solar developer Recurrent Energy for $305 million).

The acquisition came at a time when manufactures of solar cells and panels ventured into the area of installation and project development.

San Francisco-headquartered Recurrent Energy, founded in 2006, has sold more than 520 MW of solar photovoltaic projects and won more than 1.1 GW of power purchase agreements and secured more than $4 billion in project financing.

The company is developing utility-scale solar projects across North America in key solar markets including California and Texas with a solar project pipeline exceeding 3.3 GW. However, the subsidiary was not a big consumer of Sharp's solar panels.

In fact, Sharp was looking to sell the business soon after it acquired it. In 2012, reports suggested a possible sale of the unit for around $321 million as part of the company's restructuring.

As negotiations with domestic financial institutions failed, Sharp put the business out to tender. About 15 Japanese and international companies participated in the bid, of which Canadian Solar is reportedly the highest bidder.

Osaka-based Sharp, a veteran with five decades of expertise in the manufacture of solar cells and panels was once a market leader, prior to Chinese foray into the solar market.

Performance of the company's energy unit has been plunging due to slump in residential solar sales in Japan.

For the quarter ended September, Sharp reported nominal net income of ¥6.5 million after reporting two consecutive quarters of losses.

It is believed that the sale would help Sharp to raise capital as it struggles to increase its equity ratio to a healthy level which is hovering at around 10 per cent as the end of September.

''Sharp is considering various options for Recurrent including sale of the company, but nothing has been decided at this point,'' Miyuki Nakayama, a spokeswoman for Sharp, told Bloomberg today.

Recurrent declined to comment on the matter.

Media reports suggest that Sharp is set to finalise the basic agreement by the end of the month.

Sharp's latest pull back from the solar industry, if it  materialises, will follow similar moves earlier this year of stopping production of solar panels in the US and the UK and backing off from its Italian solar joint venture 3SunSrl.

Ontario-based Canadian Solar is one of the leading solar manufacturers in the world, delivering solar cells, modules and power systems and off grid solar power application solutions.

The company, established in 2001, has manufacturing facilities in Canada and China and has a total module production capacity of 3 GW. Canadian Solar has business subsidiaries in 20 countries spanning 6 continents including Canada, US, Japan, China, Germany and India, and has a customer base of over 1,000 in 90 countries.

Recurrent's current rivals include Arizona-based First Solar Inc and French oil giant Total SA-controlled SunPower Corp which have their own module making facilities. A business combination with Canadian Solar would place Recurrent in a stronger vertically-integrated platform to take on its competitors.