SunPower snaps up SunRay in $277m deal

California-based solar energy giant SunPower has today announced it is to shell out $277m to acquire Italian solar specialist SunRay Renewable Energy in a deal that will significantly bolster its presence in Europe and the Middle East.

The company confirmed it has signed a definitive agreement to acquire SunRay and its pipeline of solar photovoltaic projects totaling more than 1,200MW of capacity in Italy, France, Israel, Spain, the United Kingdom and Greece.

Under the deal, which is subject to regulatory approval and is expected to close during the first half of the year, SunPower will pay $235m in cash and $42m in a letter of credit and promissory notes. The company said that it has the cash available and does not expect to raise further capital to complete the acquisition.

SunPower is one of the few solar energy firms to operate right across the market, developing and manufacturing solar panels, as well as undertaking residential, business and utility scale projects. Howard Wenger, president of SunPower's utilities and power plants business group, said that the acquisition of SunRay would bolster its strategy to strengthen its presence in the fast-growing European market for utility-scale solar plants.

Both companies downplayed the potential for integration challenges, highlighting the fact that they have previously worked successfully together to develop a 24MW solar farm at Montalto in Italy.

"Our experience working with SunPower on Montalto and several other power plants in Italy convinced us that SunRay will be joining the global solar technology, performance and quality leader for solar power plants," said Yoram Amiga, chief executive of SunRay Group. "Our combined experience globally will allow us to offer our customers reliable energy delivery at competitive prices. "

Despite fears that Italy's solar incentives are likely to be cut in the coming months, SunPower said that the acquisition of SunRay and its previous purchase of Italian firm Solar Solutions highlighted its commitment to one of Europe's fastest growing markets.

"SunRay has a strong pipeline in Italy, with several power plants already permitted for delivery in 2010," said Gian Maria Ferrero, vice president of SunPower's Europe, Middle East and Africa utilities and power plants business unit. "Italy has demonstrated sustainable, strong growth in both rooftop and ground-mounted solar systems, bringing new jobs to the market and private investment into new power resources without the need for major new transmission investment."