After a period of haggling punctuated by a dispute, SunPower Corporation (NASDAQ:SPWR) and its joint venture partner AU Optronics Corp (AUO) have reached an agreement. Under the agreement, SunPower will take full control of a cell making joint venture business that the partners had set up. The JV is an 800-MW fabrication plant located in Melaka, Malaysia.
SunPower Corporation (NASDAQ:SPWR) will part with $170 million in favor of AUO to give it full control of the Melaka facility. However, the takeover will be a gradual process as it is expected to roll over four years.
Further, the takeover has been modeled around a stock buying agreement between SunPower and AUO. As part of the agreement, SunPower will supply AUO with 100-MW of solar panels and AUO will continue to supply wafers.
SunPower said that the transaction agreements it has entered into will resolve the dispute that the company had with its partner AUO.
What’s the management saying?
SunPower Corporation (NASDAQ:SPWR) CEO, Tom Werner, commented that the agreement with AUO will enable SunPower to take control of its highest-performing solar cell facility. On top of that, the takeover will support technology upgrades and expansion of SunPower’s high-efficiency solar cell technology to meet demand.
The takeover of the Melaka facility comes after SunPower moved to close its panel-assembly plant in the Philippines and move the operations to Mexico. The relocation of panel production operation is expected to reduce operating costs as some 1,200 jobs will be lost.
SunPower Corporation (NASDAQ:SPWR) decided to cut its 2016 non-GAAP revenue guidance to a range of $3 to $3.2 billion. The company originally guided for revenue in the band of $3.2 to $3.4 billion. SPWR now expects 2016 non-GAAP gross margin of 10.5% to 12.5%, down from the previous guidance of 14% to 16%.
As for 2Q2016, SunPower reported adjusted revenue of $401.8 million and adjusted EPS loss of $0.22.