Tongwei, a Chinese solar company, plans to acquire a controlling stake in Runergy at a cost of $698 million.

Tongwei, a Chinese solar company, plans to purchase a majority stake in rival Runergy. The deal will cost the company approximately 5 billion yuan (697.78 million dollars). This move would enable the company to establish itself in the United States.

Tongwei, in a late Tuesday filing to the Shanghai Stock Exchange, said that it was looking at acquiring 51% or more of Runergy through a capital increase and share purchase.

Runergy is one of the Chinese solar companies that are setting up in the U.S. in order to benefit from the clean energy manufacturing subsides under the 2022 Inflation reduction Act.

Tariff barriers prevent Chinese companies from exporting to the United States - a market with higher margins.

Analysts expect consolidation of China's solar industry, which is facing overcapacity and mounting losses, as well as calls from regulators to restrict investment in new production.

According to the filing at the stock exchange, Runergy's production capacity is 57 GW for solar cells and 13 GW for modules. InfoLink Consulting reported that Tongwei ranked fifth in China for solar module shipments during the period January-June.

Tongwei's first-half preview revealed that the company reported a loss of between 2.2 and 2.5 billion yuan for the second quarter. (Reporting and editing by Shounak dasgupta; Colleen howe)

(source: Reuters)