SunPower and Total have announced that the two companies have entered into a broad strategic relationship to shape the future of the solar industry. Total Group will launch a friendly tender offer through a wholly owned subsidiary for up to 60 percent of SunPower’s outstanding Class A Common shares and 60 percent of SunPower’s outstanding Class B Common shares at a price of $23.25/share for each class. The offer price represents a 46 percent premium over the April 27th, 2011 closing price of SunPower’s Class A common stock and a 49 percent premium over the April 27th, 2011 closing price of SunPower’s Class B common stock, and values SunPower’s equity at $2.3 billion.
In addition, Total will provide SunPower with up to $1 billion of credit support over the next five years. Following closing of the transaction, which has been approved by the boards of both companies, SunPower will continue to operate with its current management team.
Under the terms of the tender offer agreement, SunPower shareholders will receive $23.25 per share in cash at closing for each share validly tendered in the tender offer, subject to pro-ration in the event that more than 60 percent of SunPower’s Class A and Class B shares are tendered. Total expects to begin its tender offer within 10 business days. Following the completion of the transaction, SunPower’s shares will continue to trade on Nasdaq under the symbols “SPWRA” and “SPWRB. The closing of the tender offer is conditioned on a minimum of 50% of the outstanding shares of each of the Class A and Class B common stock being tendered, clearance by U.S. and European Union antitrust authorities, and other customary closing conditions.
Under the credit support agreement, Total will offer to guarantee an amount up to $1 billion of SunPower’s repayment obligations with respect to letters of credit issued over the next five years in connection with SunPower’s global utility power plant and large commercial installation businesses. This credit support should allow SunPower to substantially reduce the total costs of its letters of credit and financing. SunPower’s affilitation with Total is expected to benefit SunPower, lowering its cost of capital and increasing its access to uncollateralized debt financing.
In addition, SunPower and Total have entered into an affiliation agreement under which Total will nominate a majority of directors to SunPower’s board of directors, which will be expanded to 11 members following the closing. This agreement also includes conditions on Total’s ability to purchase additional shares of SunPower. Specified transactions between Total and SunPower shall be approved in advance by SunPower’s independent board members.
SunPower and Total have also entered into a research and collaboration agreement under which the companies will focus on advancing photovoltaic technologies across multiple research and development projects.
SunPower intends to call a meeting of its stockholders within six months following closing to combine its Class A and Class B common stock into a single class of common stock with one vote per share. This plan is subject to the company’s receipt of a tax opinion that such reclassification will be permitted on a tax free basis, and Total has agreed to vote its shares in favor of the reclassification.
Total to buy majority stake in SunPower