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Canadian Solar to buy Recurrent Energy from Sharp for $265m

Canadian Solar has agreed to purchase Recurrent Energy from Sharp for $265m.

The deal ends years of speculation about Sharp’s plans to sell the US solar developer, which the Osaka-based electronics group bought for roughly $305m in September 2010.

“We have been shifting our solar-cell business from a conventional business model centred (on) the production of panels and modules to a business model centred on solutions,” Sharp spokesperson Miyuki Nakayama tells Recharge.

"There’s a volatility risk to maintain the considerable amount of funds required for Recurrent Energy… for the initial phases of big projects, you need to have a considerable amount of funds. So that was kind of a risk to us. And that’s one of the reasons why we’re transferring Recurrent Energy to Canadian Solar.”

Sharp — which expects to record a ¥30bn ($257m) loss in the current fiscal year — plans to finalise the Recurrent deal before the end of March.

Credit Suisse served as sole financial advisor to Canadian Solar, while Scotia Capital (USA) and Bank of Tokyo-Mitsubishi UFJ advised Sharp.

The acquisition will roughly double Canadian Solar’s global PV development pipeline to 8.5GW, while its late-stage project pipeline will grow by about 1GW to 2.4GW, according to an online statement.

San Francisco-based Recurrent has a 1GW late-stage pipeline, primarily in California and Texas, with more than 4GW of solar planned for development throughout North America.

“Recurrent's 1GW late-stage pipeline is one of the largest utility-scale project portfolios scheduled to be built prior to the ITC expiration in 2016, and represents an estimated revenue opportunity of at least $2.3bn,” Canadian Solar said.

It said the deal strengthens its “position as a leading solar energy developer, with a globally diversified project pipeline in low risk geographies.” It added that the acquisition will expand its ability to develop and finance new projects, setting the stage for it to potentially set up a yieldco at some point in the coming months.

Speculation that Sharp would sell Recurrent first surfaced in September 2012, although Nakayama says that the company did not formally begin considering a sale until autumn 2013.

In October, it refused to comment on a Japanese media report suggesting that Tokyo-based thin-film PV specialist Solar Frontier was one of several companies interested in acquiring Recurrent.

Sharp's Nakayama acknowledges that a number of parties expressed interest in purchasing the US developer, but declined to identify specific investors.

The company has aggressively restructured its global solar business over the past year,in a bid to capitalise on strong PV demand in Asia. It is also expanding its EPC business to become an “energy solutions provider,” rather than primarily making solar modules and storage batteries.

Its group net sales fell 6.4% on the year in the third quarter to ¥762.7bn, according to a separate statement released today.

Sales in its energy solutions business plunged 50.6% from a year earlier to ¥53.6bn. It shipped 349MW of solar cells in the three months to 31 December, from 537MW in the second quarter.

It revised its initial full-year PV shipment target from 2GW to 1.9GW.

Although Sharp is forecasting its third annual group loss in four years, it said that the Recurrent sale would not have a significant impact on its earnings.

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