The REC acquisition: "A good agreement for all parties"

In one fell swoop, Orkla managed to secure an almost 40 per cent stake in the world’s leading solar energy company, REC, and a future delivery contract for Elkem Solar. “Impressive” was one Orkla analyst’s verdict. The news was well received by most analysts, journalists and the stock exchange and the market reacted by sending the share price up from NOK 388 to NOK 413 in two days.

The market reacted positively to the fact that, with this move, Orkla has significantly strengthened its strategic position in the solar energy sector, and to the price that was paid.  While the REC share price crept above NOK 150 before the weekend, the agreement was announced on Monday 5 February at a price of NOK 105 per share.

“This is a situation where all the parties had something to gain by reaching an agreement.  We feel that it is a good agreement for Orkla, but it is also good for our partners – otherwise there would have been no agreement. This is because the agreement consists of several elements, and even though we had different desires and approaches we have arrived at an overall solution that all the parties are satisfied with,” says Group President and CEO Dag J. Opedal. 

Orkla bought 12.48 per cent of the share capital in the Renewable Energy Corporation (REC) from Good Energies Investments (GEI), who for their part swapped other REC shares for a stake in Q-Cells. Following this transaction, Orkla’s total shareholding in REC is equivalent to 39.99 per cent of the company’s share capital.

The agreement that was negotiated consisted of several transactions, the most important of which for Orkla and Elkem was a delivery contract for the sale of high-purity silicon metal from Elkem Solar to the German solar energy company Q-Cells.

Elkem Solar AS has also entered into a longterm contract with Q-Cells for delivery of a large quantity of high-purity silicon metal in the period up to 2018.

Growth potential
“We are satisfied that we were able to increase our interest in REC. Orkla believes that the solar cell industry has interesting growth potential and we have confidence in REC’s ability to create value in this industry on the basis of the company’s strong market position, technological expertise and competent management. Orkla has no intention of increasing its interest in REC above 39.99 %. Orkla supports REC’s strategy,” says Executive Vice President Ole Enger.

“To realise its growth potential, we believe it is important for REC to have access to the capital markets and continue to be a listed company.  As a long-term industrial shareholder, Orkla will support the continued growth and internationalisation of REC,” says Ole Enger.

Elkem Solar’s delivery contract with Q-Cells is on ordinary market terms. The contract volume is equivalent to remaining capacity until 2012 at the 5000 tonnes factory that is currently under construction in Kristiansand. Between 2013 and 2018, Elkem Solar will sell 2,400 tonnes a year to Q-Cells. Q-Cells will also have an option to buy a further 1,600 tonnes in 2010 and 5,000 tonnes a year from 2011 to 2018 if Elkem Solar AS increases its production capacity.

“Elkem Solar is satisfied to have signed this kind of delivery contract with Q-Cells, which is a world leader in the solar cell industry. The contract secures deliveries for the remaining production capacity at our new factory that is currently under construction in Kristiansand,” says Elkem boss John G. Thuestad.


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