Trina Solar, a world-leading PV company that has been listing on NYSE, has entered into a definitive agreement and plan of merger (Merger Agreement) with Fortune Solar Holdings and Red Viburnum Company, a wholly-owned subsidiary of Fortune Solar. An investor consortium including Fortune Solar and Red Viburnum Company will acquire Trina Solar’s shares all in cash and set the company to go private. The transaction value is estimated to be approximately US$1.1 billion, and the merger is scheduled to be closed in the first quarter of 2017.
Trina Solar announced plans to go private in December 11, 2015, targeting to exit NYSE. The company sequentially appointed Citigroup Global Markets Inc. and Kirkland & Ellis as its financial advisor and international legal counsel, respectively, in January, 2016. The Merger Agreement was officially announced on August 1, 2016.
According to term of the Merger Agreement, each ordinary share of Trina Solar issued and outstanding immediately prior to the effective time of the merger will be cancelled and cease to exist in exchange for the right to receive US$0.232 in cash without interest, and each American depositary share (ADS) of Trina Solar, representing 50 shares, will be cancelled in exchange for the right to receive US$11.60 in cash without interest. The total equity value to take Trina Solar private and exit NSYE is at approximately US$1.1 billion.
The investor consortium includes, among others, Ji-fan Gao (CEO of Trina Solar), Shanghai Xingsheng Equity Investment & Management Co., Ltd., Shanghai Xingjing Investment Management Co., Ltd., Great Zhongou Asset Management (Shanghai) Co., Ltd., Liuan Xinshi Asset Management Co., Ltd. and/or their respective affiliates.
The merger consideration represents a premium of 21.5% to the closing price of Trina Solar’s ADSs on December 11, 2015, a premium of 20.2% to the average closing price of the ADSs during the 90 trading days prior to its receipt of a "going-private" proposal, and a premium of 40.6% to the closing price of Trina Solar's ADSs on Friday, July 29, 2016, the last trading day prior to the this announcement.
“NYSE is not a friendly investment environment for solar-related stocks, especially for China companies such as Trina Solar and JA Solar,” explained one of EnergyTrend’s analyst. “Most of the Chinese PV companies listing on NYSE are suffering from underestimated values.”
The going-private move is obviously a decision to get rid of the solar-reluctant investment environment. It is widely speculated that Trina Solar will relist on another market for better financial development.