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Why Shares of Hanwha Q Cells Jumped 19% Today

By Travis Hoium - Oct 16, 2018 at 11:55AM

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Another solar company could be bought out.

What happened 

Shares of solar manufacturer Hanwha Q Cells (HQCL) jumped as much as 19.3% in trading Tuesday after a buyout agreement was announced. The gain settled at about 16.7% at 10:45 a.m. EDT. 

So what

Hanwha Q Cells is already controlled by Hanwha Chemical Corporation, but now the conglomerate wants to own the whole company. Through a subsidiary called Hanwha Solar Holdings, a buyout valuing Hanwha Q Cells at $825 million has been offered and agreed to. The deal, if completed, will pay shareholders $9.90 per share, a slight premium to where shares were trading early Tuesday. 

Solar farm with mountains in the background.

Image source: Getty Images.

Given Hanwha Chemical's size, this isn't as risky a buyout offer as some in the solar industry that have included management and a lot of leverage. That's why shares have jumped to near the buyout price. 

Now what

This buyout agreement continues a long trend of solar companies going private. Trina Solar, JA Solar, and Canadian Solar have gone private or have agreed to a deal. For investors, I don't see much upside in holding on to shares given the small premium the buyout might give when completed early in 2019. I would take the risk that the deal falls through off the table, and cash in on this big pop today.  

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