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Sale of controlling stake in China’s largest poly maker falls through

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Sale of controlling stake in China’s largest poly maker falls through



Shanghai Electric’s move to take over GCL-Poly’s Jiangsu Zhongneng has fallen through because conditions are not ‘mature enough’. The development, announced this afternoon to the Hong Kong Stock Exchange, will be closely watched by the global solar industry.

A brief, two-page statement issued to the Hong Kong Stock Exchange an hour ago is all that was required to signal the collapse of Shanghai Electric’s deal to take a controlling stake in China’s largest polysilicon maker – and perhaps to fire the starting gun on a painful round of consolidations across the nation’s solar industry.

In a statement to the exchange issued at 2.22pm CET, GCL-Poly Energy Holdings Ltd – parent company of Chinese poly making subsidiary Jiangsu Zhongneng – announced the proposed CNY12.75 billion ($1.86bn) agreement had fallen through because “both parties believe that the timing and conditions for proceeding on the potential disposal [by GCL-Poly] are not mature enough”.

With the Beijing authorities having unexpectedly called time on solar incentives at the end of May, quite when a Chinese solar manufacturing market set to be lashed by huge overcapacity will be ‘mature enough’ again is anybody’s guess.

Electrical equipment manufacturer Shanghai Electric had announced plans to a acquire a 51% stake in Jiangsu Zhongneng two months ago, with the poly maker at that point valued at CNY25 billion.

With no reason to anticipate anything other than a repeat of last year’s solar boom in China at that point, the purchaser was set to enter the solar marketplace in a big way by taking over a company that couldn’t produce polysilicon quickly enough to satisfy the domestic market.

After the abrupt policy turnaround in May, however, Jiangsu Zhongneng – which had announced plans to raise CNY300 million with an asset sale of its own last November in order to finance a new 40,000-60,000 MT polysilicon fab in the Xinjiang region – now probably looks like rather more of a gamble in a market set to be saturated by polysilicon just as global demand wanes.

The bullish nature of the solar materials market before May was also demonstrated by GCL-Poly’s plans for a separate 20,000 MT polysilicon manufacturing unit in Xinjiang.

There are plenty of other big players throughout the Chinese solar industry that will eye today’s announcement with trepidation.



Source PV Magazine

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