Tongwei, a vertically integrated solar manufacturer in China, has signed a “capital increase intention agreement” with China-based module producer Runergy, its major shareholders, and Chinese state-owned investment management company Jiangsu Yueda Group.

The deal outlines a multi-step acquisition process. Initially, Jiangsu Yueda will inject CNY 1 billion ($139.7 million) into Runergy. Tongwei will then conduct due diligence, auditing, and valuation before finalizing the capital increase, which implies the acquisition of the company.

The plan involves using either self-raised or borrowed funds to invest in Runergy and purchase the shares acquired by Jiangsu Yueda as well, aiming to secure at least 51% of Runergy's equity. The total acquisition cost is capped at CNY 5 billion.

Runergy, a major independent solar cell manufacturer, ranked among the top three global solar cell suppliers from 2020 to 2022 and placed in the top five in 2023, according to InfoLink Consulting. Although Runergy has expanded into upstream and downstream sectors like polysilicon, wafers, and modules, solar cells remain its core business, accounting for more than 99% of its revenue from 2020 to 2022.

Runergy previously planned to raise CNY 4 billion through an initial public offering on the Shenzhen Stock Exchange’s Growth Enterprise Market (GEM) to fund capacity expansion and working capital. Despite yecuring approval from the China Securities Regulatory Commission (CSRC) in June 2023, the company did not complete the listing process within the one-year validity period.

In light of declining prices and underperformance in the photovoltaic sector, both the Chinese government and the China Photovoltaic Industry Association (CPIA) have encouraged mergers and acquisitions to promote healthier industry development.