High Oil Prices May Trigger Roll-Up In Solar Power Industry

High crude oil prices are stoking speculation about the next wave of mergers and acquisitions in the solar energy industry. On Thursday, Standard & Poor’s released the results of a study examining recent trends in global announced M&A activity targeting producers and manufacturers in the solar power space. Based on S&P’s analysis, there appears to be a meaningful relationship between high oil prices and solar M&A activity. Per S&P’s synopsis: From 2004-2008, the annual value of solar M&A activity steadily rose each year, with deal activity reaching $3.1 billion in 2008 (oil prices peaked in July 2008). The global recession, which came soon after, drove down energy demand and oil prices, leading solar M&A to decrease to $2.9 billion in 2009. After the worst of the recession, deal volume rebounded and reached a peak of over $10 billion in 2011 with several billion dollar solar M&A transactions taking place in a single year, including the following keynote deals: MidAmerican Renewables LLC acquired the Topaz Solar Farm from First Solar Inc. for $2.4 billion, Total TOT -0.56% Gas & Power USA S.A.S. acquired a 60.63% stake in SunPower SPWR -1.61% Corp. for $1.4 billion in cash and RREEF Pan-European Infrastructure Fund L.P. and Antin Infrastructure Partners acquired a 90% stake in Andasol 1 Central Termosolar Uno S.A. and Andasol 2 Central Termosolar Dos S.A. from Cobra Instalaciones Y Servicios S.A. While no billion-dollar deals have occurred so far this year in the solar energy sector, the pace and scale of activity appears to be increasing with three of the year’s top five deals taking place since the start of the third quarter, including the following deals: Macquarie European Infrastructure Fund IV L.P.’s offer to acquire THEOLIA S.A. from a group of shareholders in a deal valued at $552 million on July 8th Concord Green Energy agreeing to acquire five utility-scale solar power plants from Canadian Solar CSIQ -2.61% Solutions Inc. for $279 million on Aug. 5th Buffalo E&P Ltd. agreeing to acquire an additional 43.15% stake in STX Energy Co. Ltd. from South Korea’s STX Corp . for $240 million on July 21st by http://www.forbes.com/sites/williampentland/