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.
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.
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.
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.