Motech and Topcell to Merge to Create World No.1 Solar Cell Maker

Motech Industries Co., Ltd. announced the acquisition of Topcell Solar International Co., Ltd. for an estimated NT$2.05 billion (US$66.29 million) to create the world's biggest solar-cell maker with three-gigawatt yearly capacity.

Motech, a major solar cell maker alongside Neo Solar Power Corp., will swap each of its share for six Topcell shares in the deal, to be completed by July 1, 2015 to leave only Motech in tact.

The deal is unusual for the principal shareholders of both companies are arch rivals in the pure silicon foundry market. Taiwan Semiconductor Manufacturing Co. (TSMC), a major pure foundry supplier, holds around 20% stake in Motech and two seats on its board, with Neo Solar being 92% owned by United Microelectronics Corp. (UMC), another major foundry, which will hold 9% of Motech to become the second-largest shareholder in the deal.

The deal will see Motech issue 45.67 new shares and capitalization increase around 10% to NT$4.85 billion (US$156.45 million) from the current NT$4.39 billion (US$141.83 million).

Motech Chief Executive Officer (CEO) B.H. Chang said economy of scale is critical to solar-cell makers due to intensifying competition in the crowded market, which is still expanding around 20% annually.

He stressed the merger will help cut production cost for the new entity while boost efficiency in R&D, management, sales and purchasing.

The company may take over more other peers on the island to  minimize underselling that has undermined profit in Taiwan's solar-cell industry over the past few years, with the island able to sustain two to three makers, said Chang.

While some industry watchers have commented positively about the merger, some think  TSMC and UMC may disagree over Motech's strategy as the two owners remain rivals in the foundry market.

(KL)