(Yicai) Aug. 14 -- Tongwei Group, the world's largest producer of solar silicon, said it plans to invest up to CNY5 billion (USD699 million) to become the largest shareholder of the world's fifth-biggest solar cell supplier, marking the first major merger and acquisition attempt in the industry amid a sluggish market.

Tongwei has inked a capital increase intention agreement with Jiangsu Runergy New Energy Technology's major shareholders to acquire a 51 percent stake, Tongwei announced late yesterday. The target firm also has production capacity in other links of the solar supply chain and is involved in the photovoltaic power plant business, it added.

Runergy supplies high-efficiency solar equipment, ranking third in the world by cell shipments from 2020 to 2020 and fifth last year, according to statistics from PVInfoLink.

Runergy also has a competitive production capacity in the US, Thailand, and Vietnam, which can meet the traceability requirements of overseas trade barriers for PV products, Chengdu-based Tongwei noted.

The transaction will facilitate the formation of business synergy between Tongwei and Runergy, consolidate its leading market position in core business segments, including high-purity silicon and high-efficiency solar cells and modules, and effectively improve its overseas production capacity layout, expanding its sales channels in high-premium markets, Tongwei pointed out.

Runergy was approved to go public on the ChiNext board in Shenzhen in June last year, planning to raise CNY4 billion to expand capacity and supplement working capital. However, it failed to complete the listing within the one-year term of validity due to business difficulties amid falling solar product prices.

Tongwei sold 387,200 tons of high-purity crystalline silicon last year, giving it a market share of over 25 percent, according to its 2023 annual earnings report. It sold 80.66 gigawatts of PV cells, including those for self-use, ranking first in the world for the seventh straight year, while it took the fifth spot by solar module sales with 31.11 GW.

Shares of Tongwei [SHA: 600438] rose 0.9 percent to CNY18.74 (USD2.62 ) apiece as of 1.30 p.m. in Shanghai today.

Editor: Martin Kadiev