Swiss Industrial group ABB, also known as the world's biggest supplier of industrial motors and power grids, had announced recently on Monday that it had agreed to pay $6.35 per share in cash for Power-One Inc., the second-largest maker of solar inverters which allows solar power to be fed into the power grids. The offer price is claimed to be 57% above Power-One's closing price on Friday, boosted by $266 million in net cash held by debt-free Power-One Inc. However, if the asset value is to be quoted without the cash involved, Power-One's enterprise value would amount to a total of $762 million.
As solar power is steadily rising to compete with conventional forms of energy such as gas and coal, demand for solar power is also increasing. There is a similar pattern towards solar inverters as well as they are needed to feed that power into large electric grids from commercial panel installations and smaller units found in factories and homes. "We consider the acquisition of Power-One as a smart strategic move for ABB to broaden its solar power portfolio at the right time," Vontobel analysts noted.
Mainly because of solar power's relatively complex technology, solar inverters are to be one of the last profitable parts of the solar value chain (for makers of solar cells and panels have suffered drastically from the fact that their products are easy to replicate). However, ABB believes that the solar market is set to grow its way out of overcapacity as electricity costs rise and solar power systems make it a more competitive source of energy. "ABB is currently buying into solar energy because it sees a shift in demand towards emerging markets such as China and the Middle East," said Ulrich Spiesshofer, Head of ABB and Motion, a business that includes ABB's solar activities. "Solar is, long-term, the fastest-growing renewable generation market in the world. ABB believes in this market," Spiesshofer claims in a company video.
