First Solar (FSLR) is Getting Cheap Enough to Get Bought

December 22, 2011 9:40 AM EST
Shares of First Solar (Nasdaq: FSLR) have fallen 76 percent this year and nearly 25 percent alone since December 14th, which some analysts note makes it a great acquisition target.

With once a market cap of $25 billion, larger companies such as General Electric (NYSE: GE) or Siemens (NYSE: SI) may be interested trying to purchase the company as it’s overall value has fallen as low as $2.64 billion this week, reports Bloomberg.

Although the demand for solar has fallen dramatically since last year, many analyst continue to forecast a strong growth in the industry over the next decade or so as the price of fossil fuels and electricity continue to increase. The solar market is currently valued at roughly $55 billion.

The company recently announced new restructuring plans which include firing 100 employees over the next six months and focusing more on the large utility scale power plants over smaller rooftop installations. These new restructuring plans come as the company fired its previous chief executive officer and appointed Michael Ahearn as founder and chairman, on an interim basis. First Solar also announced back in October plans to invest around $10 billion within the next few years on the development of cleaner and greener products across its large-equipment areas.

With the depletion in demand, supplies in the solar industry are extremely high and have caused the price of solar panels to drop by 47 percent this year alone. Bloomberg reports, the company's thin-film panels require less energy and time to construct as they use cadmium-telluride unlike many other companies. Having a niche in the market allows some analyst to remain bullish on First Solar's future unlike other larger and smaller solar companies. This may also entice General Electric or other much larger companies to make an offer sooner rather than later as the company is currently trading at 0.65 times its book value.

First Solar would make a great addition to any energy companies portfolio, but buyers should be aware that any deal would first have to get approved with the Walton family. The Waltons own about a 33 percent stake in First Solar and would require at least a 50 percent multiple to be bought out, notes Bloomberg. The website also highlights, Total SA (NYSE: TOT) purchased a 60 percent stake in SunPower Corp. (Nasdaq: SPWR) back in April for a 44 percent premium, so a 50 percent premium is not out of the question as First Solar continues to be profitable.

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