SunPower Corporation (NASDAQ:SPWR) is in the process of taking full control of a solar cell manufacturing facility in Malaysia that it currently co-owns with AU Optronics (AUO). For $170 million, SunPower will buy out partner AUO in the joint venture.
The solar cell factory that SunPower is set to take control of is located in the Malaysian region of Melaka and it is known for production of high-performing solar cells. The factory is an 800-megwatt capacity plant.
Positioning for growth
According to SunPower CEO Tom Werner, the Melaka facility is their highest performing solar cell plant. He added that taking complete control of the factory will allow for technology upgrades that will support further expansion and efficient operations.
At SunPower, executives are excited that they are taking control of the Melaka solar cell facility at a time when solar industry continues to grow globally. CEO Werner said in a statement that they expect the solar industry to continue growing for the foreseeable future, supported in part by low-cost solar panels.
Growth catalysts
The desire to curb climate change is another reason interest in renewable energy such as solar and wind is expected to increase. Last year, close to 200 nations met in France to draft what has come to be known as Paris climate agreement that calls on nations to speed up the shift from fossil fuels to green energy. The Paris climate deal was signed this year in the U.S. and the move is expected to boost demand for clean energy.
The takeover of the Melaka plant is expected to help SunPower compete more effectively with low-cost solar manufacturers in China. Additionally, the Malaysian plant also puts SPWR closer to emerging solar markets such as India.
Stock payment over four years
SunPower disclosed that its takeover of the Melaka solar cell factory will be a gradual process that will span four years. The $170 million purchase price of the facility will be settled through stock payment.
The agreement that SunPower has reached with its partner AUO also resolves a dispute that the two companies had between them.
