Canadian Solar Inc. (CSIQ:US) gained the most in more than a month on a report that China National Offshore Oil Corp. is in talks to buy the maker of solar modules.
Canadian Solar climbed 7.6 percent to $3.54 at the close in New York, the biggest increase since March 9 and giving it a market value of $154.1 million. China Business Media said the company is in negotiations to be bought by China’s national oil producer, without saying where it obtained the information.
The solar company, which is based in Kitchener, Ontario, and manufactures most of its products in China, denied it may be bought by CNOOC, Reuters reported.
Canadian Solar and other Chinese panel companies are due for acquisitions after production surged and prices fell by half last year, said Hari Chandra Polavarapu, an analyst at Auriga USA in New York.
“Logically, consolidation should happen because you have an excess supply situation,” Polavarapu said in an interview today. “The entire industry would welcome it, and the Chinese solar companies would welcome it as well because there’s a dire need.”
Canadian Solar produced 1.3 gigawatts of panels, according to company reports. Its shares had dropped 67 percent in the past year through April 13.
CNOOC wouldn’t be the first petroleum producer to buy a solar manufacturer. Paris-based Total SA purchased two-thirds of SunPower Corp. (SPWR:US) last year.
Oil and Solar
“There’s no obvious connection or strategy rationale” for CNOOC to purchase Canadian Solar, “but there was no obvious connection for Total buying SunPower,” Aaron Chew, an analyst at Maxim Group LLC in New York, said in an interview.
“From a strategy perspective, an oil company could say that renewables are their biggest threat and that they need some exposure,” Chew said.
CNOOC signaled its intentions as early as 2007 to expand into renewable energy, and in February formed a $300 million joint venture with the Spanish solar company Isofoton SA to develop photovoltaic plants in Asia.
Canadian Solar didn’t reply to calls and e-mails today. The oil company didn’t immediately respond to a call to its investor relation department after regular business hours in China.
CNOOC’s discussions with Canadian Solar are stalled over disagreements on the terms, China Business Media said.
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