LONDON â€" The Swiss engineering company ABB agreed on Monday to buy the American renewable energy manufacturer Power-One for $1 billion.
Under the terms of the deal, ABB has offered shareholders in the Camarillo, California-based company $6.35 a share to acquire the maker of so-called solar inverters that are used to channel the renewable energy into countries’ electricity grids. The deal represents a 57 percent premium to Power-One’s closing share price on Friday.
ABB said the acquisition would help to increase its market share in the global solar power market, which is expected to grow by around 10 percent annually over the next decade, according to the International Energy Agency.
Despite the expected growth in the renewable energy industry over the coming years, many green energy firms like Solyndra and Suntech Power have suffered recently as the global economic slowdown has cut demand for electricity across the Western world, while subsidies for wind and solar projects also have been reduced.
Unlike other solar companies that have faced tough financial headwinds, Power-One, the world’s second largest solar inverter maker behind SMA Solar of Germany, reported a pretax profit of around $120 million last year, and employs more than 3,000 people, mostly in the United States, China and Slovakia, according to a company statement. The company’s share price, however, has fallen 66 percent since its all-time highs in 2010.
The deal for Power-One is expected to close in the second half of the year.
Credit Suisse and the law firm Cleary Gottlieb Steen & Hamilton advised ABB, while Goldman Sachs and the law firm Gibson, Dunn & Crutcher advised Power-One.
