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LG, Conergy Enter Solar Cell JV
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The joint venture with Conergy provides LG with an opportunity to make a swift and effective entry into the solar industry, with a leading downstream company as its partner.
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Monday, September 15, 2008:
LG Electronics and Conergy AG, a Photovoltaic(PV) solution provider, have signed a memorandum of understanding to form a joint venture in the solar module manufacturing business. LG would acquire a 75 per cent stake in Conergy’s solar module plant in Frankfurt (Oder), under the deal, and Conergy would retain 25 per cent. The plant is currently in the ramp-up phase. LG and Conergy project that their partnership would get underway by the end of this year.
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LG will bring to this deal its R&D knowledge, including several years of R&D in various photovoltaic technologies. LG will also leverage its expertise in mass manufacturing from similar industries such as flat panel displays. Conergy will provide the joint venture with access to the market through its distribution franchise that spans across over 20 countries on five continents.
“This is an opportunity for us to take the lead in the solar technology market right from the start. Contributing our technology and operational expertise to the joint venture allows us to enter the industry much faster and with better valuations than would simply acquiring a standalone solar module manufacturer,” said Kwan Shik Cho, head, solar cell business team, LG Electronics. “In addition, this partnership provides us with the strategic advantage in that we gain Conergy -- the leading global downstream player -– as a long term partner.”
For Conergy, the joint venture is a step further on its road to becoming a focussed downstream company. The strategic partnership would also secure Conergy’s technological lead and future supply of solar modules and help pave the way to profitable growth, the company said.
“In taking this step, we have created the opportunity for a long-term partnership with LG Electronics. This strategic alliance will also help us further develop into a leading provider within the photovoltaic market," said Dieter Ammer, CEO, Conergy. "This would also mean moving significantly further in our realignment programme, with a clear focus on downstream activities.”
Morgan Stanley is advising LG Electronics and Jefferies is advising Conergy in the transaction.
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