SunPower heads off Trump tariffs with SolarWorld purchase (updated)

Solarworld AG

18/04/2018 19:06

(Adds details on the deal, background, quotes, updates share
activity)
    By Nichola Groom
    April 18 (Reuters) - SunPower Corp  SPWR.O  on Wednesday
said it would buy U.S. solar panel maker SolarWorld Americas,
expanding its domestic manufacturing as it seeks to stem the
impact of Trump administration tariffs on panel imports.
    Terms of the deal were not disclosed.
    The news sent SunPower's shares up 12 percent on the Nasdaq
to their highest level since before President Donald Trump
imposed 30 percent tariffs on imported solar panels in January.
    SunPower is based in San Jose, California but most of its
manufacturing is in the Philippines and Mexico. The company had
lobbied heavily against the solar trade case brought last year
by U.S. manufacturers, including SolarWorld, which said they
could not compete with a flood of cheap imports.
    The deal is a win for the Trump administration's efforts to
revive U.S. solar manufacturing through the tariffs. SunPower
will manufacture its cheaper "P-series" panels, which more
directly compete with Chinese products, at the SolarWorld
factory in Hillsboro, Oregon, it said.
    "The time is right for SunPower to invest in U.S.
manufacturing," Chief Executive Tom Werner said in a statement.
    The White House did not immediately respond to a request for
comment.
    The announcement comes as SunPower is seeking an exemption
from the tariffs on its higher-priced, more efficient panels
manufactured overseas. It has argued to the U.S. Trade
Representative, which will make a decision on exemptions in the
coming weeks, that those products should be excluded because
there is no U.S. competitor that makes a similar product.
    Baird analyst Ben Kallo said the SolarWorld deal would
enable the company to compete against Chinese imports should
SunPower's products not receive an exemption, but added that
some in the market would question whether products produced in
the United States would be profitable.  
    The deal will inject much-needed capital into SolarWorld's
long-suffering manufacturing plant, and give it the support of a
major market player. SunPower is one of the largest solar
companies in the world and is majority owned by France's
deep-pocketed oil giant Total SA  TOTF.PA . 
    The U.S. arm of Germany's SolarWorld AG  SWVKk.F  opened the
Hillsboro factory in 2008 as it sought to capitalize on surging
solar demand in the United States. Yet its start coincided with
a dramatic increase in the production of cheaper solar products
in Asia, and SolarWorld struggled to compete. 
    Twice, in 2012 and 2014, trade cases brought by SolarWorld
prompted the U.S. Commerce Department to slap import duties on
solar products from China and Taiwan. Yet prices on solar panels
continued their freefall, and just three years later, in 2017,
the company joined rival Suniva in asking for new tariffs.
    SolarWorld called the outcome "ideal" for its hundreds of
employees in Hillsboro. 
    SunPower shares were up 87 cents, or 10.4 percent, at $9.22
in mid-day trade on the Nasdaq. The stock hit a high of $9.75
earlier in the session, its highest since late 2017.

 (Reporting by Nichola Groom; editing by Dan Grebler and Chizu
Nomiyama)
 ((nichola.groom@thomsonreuters.com))