MEMC to buy solar silicon ingot specialist Solaicx in mostly cash deal

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In yet another sign of ongoing consolidation in the solar PV manufacturing sector, MEMC Electronic Materials has agreed to purchase privately held Solaicx in a mostly cash deal. Solaicx, which has 80 employees and a production facility in Portland, OR, has developed a proprietary continuous crystal-growth manufacturing technology that the companies say produces high-quality, low-cost silicon ingots that enhance the electrical performance of monocrystalline solar wafers made from the material.

MEMC will pay Solaicx’s existing securityholders at closing cash in the amount of $66 million, plus an additional amount in cash equal to amounts which have been recently invested in, or which may be invested prior to, closing in Solaicx by its existing securityholders—an amount estimated to be approximately $10 million.

In addition, Solaicx's indebtedness for borrowed money will be extinguished at closing and is included in these amounts. The merger consideration is also subject to adjustment based on the net working capital of Solaicx at closing. 

The agreement also includes an earnout, should Solaicx meet certain performance targets in 2010 and 2011, of up to an additional $27.6 million payable to Solaicx securityholders, consisting of cash and MEMC common stock at the election of the securityholder. The stock portion of the earnout consideration, if any, will be issued to Solaicx securityholders as a private placement.

The acquisition is expected to close by the end of June, subject to customary closing conditions.  MEMC expects the acquisition to be accretive to earnings in 2011, subject to purchase accounting adjustments.

GCA Savvian Advisors acted as exclusive financial adviser to MEMC for the deal.

“Solaicx, along with its people and technical expertise, is a great addition to MEMC,” said Ken Hannah, president of MEMC Solar Materials. “Solaicx's innovative and advanced manufacturing technology should enable us to reduce costs and improve efficiency, while enhancing our ability to drive the solar industry toward grid parity.”

“Bringing MEMC and Solaicx together now is the right thing to do at the right time,” he continued Hannah.  “The monocrystalline silicon market is forecast to grow at a compound annual growth rate of about 50% [over] the next three years.  This transaction positions MEMC to significantly reduce the cost of monocrystalline silicon.”

“Our technology combined with MEMC's footprint and scale will enable our customers to further reduce the cost of solar electricity,” said David Ranhoff, president/CEO of Solaicx.

Unlike MEMC’s downstream, project development-side acquisition of SunEdison in November 2009, the purchase of Solaicx represents a bid to strengthen the company’s upstream, silicon materials technology and manufacturing base.

In a previous upstream-related move, MEMC increased its stake in Eversol, a Taiwanese solar wafer producer, to about 10.6% late last year.

The company saw its solar materials segment net sales rise to $157.7 million in the latest quarter, an increase of 8.6% over the previous period, attributing the improved results to increased wafer volumes and modestly higher wafer pricing.

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