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Total agrees to big buy into renewable energy

Sunpower Corporation’s
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San Jose, United States — ESI-AFRICA.COM — 03 May 2011 – Total SA “’ Europe’s third-biggest oil producer “’ has agreed to buy as much as 60% of SunPower Corporation for US$1.38 billion, taking advantage of increased global interest in renewable energy.

SunPower “’ the second-largest solar panel maker in the United States “’ described the acquisition price of US$23.25 a share as a “friendly tender offer” in a statement after the close of regular trading. SunPower surged US$6.08, or 38%, to US$22.20 on the Nasdaq Stock Market.

“The deal for SunPower may lead to more solar industry acquisitions as U.S. and European suppliers seek help competing against rival suppliers in Asia,” said Kevin Landis, portfolio manager at Sivest Group Incorporated.

“This is exactly what SunPower needed to compete with the Chinese manufacturers that are getting so much support from their government,” Landis said in an interview. “It also allows SunPower to double down on the technology improvements they’ll need to compete in the long run.”

‘The takeover may trigger similar acquisitions by oil companies that consider renewable-energy manufacturers a way to improve their clean-energy credentials, and may profit when surging crude prices reduce demand for fossil fuels, John Hardy,” an analyst at Gleacher & Company in New York, said in a phone interview.

“This makes a lot of sense for Total, given the global shift to renewable energy, increasing concerns about nuclear power and high natural-gas prices in Europe,” Hardy added. “It’s a natural hedge against high oil prices and depleting reserves.”

Total will also provide SunPower with as much as US$1 billion of credit support over the next five years.

“The fact that a global oil and gas giant like Total has made such a significant investment in a solar company is extremely encouraging for the entire solar industry,” said Shawn Qu, CEO and founder of China-based Canadian Solar Incorporated. “Total’s investment demonstrates that solar is really coming into its own as a viable energy market, and traditional energy conglomerates want to be part of that burgeoning growth.”

Jesse Pichel, an analyst at Jefferies Group Incorporated in New York, said in an interview that other solar companies may also be acquisition targets. “This group is undervalued and at least some people recognise the value.”

The transaction is subject to approval from the boards of both companies, and must receive approval from both U.S. and European Union anti-trust authorities. SunPower said its current management team will remain intact.

Closing is also conditional on Total’s final offer including at least 50% of SunPower’s shares, the companies added.