Taipei, The largest-ever merger deal involving three major Taiwanese solar energy firms has secured approval from the Fair Trade Commission (FTC).
Under the terms of the merger deal, Neo Solar Power Corp, Gintech Energy Corp. and Solartech Energy Corp. will form the largest solar energy alliance in Taiwan. It will be named United Renewable Energy Co. (UREC), and will have paid-in capital of NT$21.1 billion (US$717.68 million).
The FTC said Wednesday the merger of the three companies is expected to benefit the economy as a whole, with such effects forecast to surpass any possible adverse impact on market competition.
In October 2017, Neo Solar, Gintech Energy and Solartech Energy announced plans for the merger, the largest-ever deal of its kind in Taiwan's solar energy industry.
The merger is expected to strengthen Taiwan's competitiveness in the global market, the three partners said.
Under the agreement, one Gintech Energy share will be swapped for 1.39 Neo Solar shares, while one Solartech Energy will be exchanged for 1.17 Neo Solar shares.
The approval from the FTC came after greenlights issued by the authorities in Germany and China on Feb. 20 and March 20, respectively.
The FTC said more than 90 percent of the production of Taiwan's solar energy industry is sold overseas, and Taiwanese firms' pricing ability is still dictated by the international market, so the merger is unlikely to affect competition in the local market.
The commission said the merger is expected to boost the economies of scale of the new company, which is forecast to strengthen the combined entity's capacity in research and development in the future, which will benefit Taiwan's economy as a whole.
According to Neo Solar, once UREC begins operations, the new company is expected to generate about NT$50 billion in sales in the first year and post NT$90-NT$100 billion in annual revenue within five years.
Solar Chairman Sam Hong (???) said after the FTC cleared the merger deal that the three firms will seek approval from the Taiwan Stock Exchange and the Financial Supervisory Commission to complete the merger, scheduled for Oct. 1.
In addition, UREC is planning to launch a private placement to raise its capital size by issuing up to 380 million new shares.
In January, the National Development Fund under the Executive Yuan decided to fund the new solar energy alliance Taiwan, as part of the government's efforts to develop renewable energy.
The decision to invest in UREC was made at a time when the government is promoting its "5 plus 2" innovative industry policy, including the renewable energy business.
However, the three companies that form UREC remained unprofitable. In 2017, Neo Solar, Gintech Energy and Solartech Energy incurred NT$4.08, NT$2.93 and NT$2.51 in loss per share, respectively.
Source: Focus Taiwan News Channel