MEMC To Acquire SunEdison for US $200M

MEMC has reached a definitive agreement to acquire SunEdison LLC. The acquisition is expected to close by the end of 2009, subject to closing conditions and receipt of regulatory approvals. The agreement calls for US $200 million to be paid at closing to SunEdison security holders, which will be paid 70% in cash and 30% in MEMC stock.

If SunEdison meets certain performance targets in 2010 it could be on the recieving end of up to an additional $89 million, consisting of cash and stock. The agreement also calls for employee retention payments of $17 million in cash at closing, plus up to $34 million in stock which is subject to SunEdison meeting certain performance criteria.

The acquisition marks a move toward a more vertically integrated solar business model for MEMC, which has historically been active only in the manufacturing space.

“This acquisition will provide a third engine of growth for MEMC,” said Ahmad Chatila, CEO of MEMC. “MEMC will now participate in the actual development of solar power plants and commercialization of clean energy, in addition to supplying the solar and semiconductor industries with our traditional silicon wafer products.”

SunEdison will continue to operate with the SunEdison name, as a subsidiary of MEMC. Carlos Domenech will continue to lead SunEdison as well. After the acquisition is complete, he is expected to be named as executive vice president of MEMC and president of SunEdison, reporting to Ahmad Chatila.

“SunEdison has successfully built about 300 solar power plants representing approximately 80 MW of generating capacity on the rooftops and grounds of customers in the United States, Canada and Europe,” Domenech said. “Our business is highly scalable and will be able to grow substantially, capitalizing on our more than 1.5 GW of pipeline, backlog and leads with a financially strong, technically sophisticated partner like MEMC, which also has a competitive cost structure in upstream materials. This combination will greatly accelerate our goal of making solar energy cost competitive with grid prices.

MEMC expects the acquisition to be accretive to earnings, subject to purchase accounting adjustments, by the second half of 2010.

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