Danfoss, SMA Solar link for inverters

German inverter maker SMA Solar Technology and Denmark’s Danfoss said they plan to enter a close strategic partnership, in which the engineering group will buy 20% of SMA’s outstanding shares for €302m ($415m) and sell its complete solar inverter business to SMA.

SMA shares jumped 7.41% to €44.42 by 1030 on Wednesday in Frankfurt in a declining overall market.

“The strategic alliance with Danfoss strengthens SMA’s leading position in the global photovoltaic market,” says SMA chief executive Pierre-Pascal Urbon, adding that in a highly competitive market environment, SMA will benefit from Danfoss’ years of experience with automated drives.

“By establishing a close co-operation there is significant potential to improve the cost position in both companies.”

Danfoss’ purchase of a fifth of SMA shares comes after the German company recently posted losses amid a stronger-than-expected decline in European solar markets, and had to lower its sales and earnings forecast for 2013.

After the completion of the transaction SMA said it will launch new products for the fast growing market segments of medium-sized PV plants in Europe, China and the USA.

Danfoss acquires 6.94 million of SMA shares at a price of €43.57 per share from SMA’s founders, their trusts and families. The cash consideration corresponds to a premium of 50% to the volume-weighted average share price over the last 60 days, the companies say.

After completion of the transaction the free float of SMA shares will be at 25.05%, while SMA’s founders, their trusts and families will hold a 54.95% stake.

Danfoss will not buy or sell shares for a lock-up period of at least 2 years. The share purchase is subject to regulatory approval. Closing of the acquisition of shares and the co-operation contract is expected within Q3 2014.

“A shareholding of 20% in SMA is a bold statement and proves our continued dedication and confidence in the solar business,” says Danfoss CEO Niels Christiansen.

“Danfoss will certainly benefit from economies of scale and the high growth rates of the solar industry.”