SunPower Corp. (NASDAQ: SPWR) shares shot up on Monday after the company announced that it plans to separate into two independent, complementary, strategically aligned and publicly traded companies: SunPower and Maxeon Solar Technologies.
Note that each company will focus on distinct offerings built on extensive experience across the solar value chain. This is similar to the Alcoa/Arconic split, but in a different industry.
Tom Werner will continue as chief executive officer and board chair of SunPower, and the company will maintain its corporate headquarters in Silicon Valley, as well as its employee and economic investment footprint across the United States and Canada, and its large, exclusive dealer network.
SunPower will focus on product innovation, downstream high-efficiency solar systems plus high-growth storage and energy services. Under the new structure, SunPower will continue to develop its dealer network, which represents the largest residential and light commercial franchise in the industry.
Jeff Waters, currently CEO of SunPower’s Technologies business unit, has been named Maxeon Solar’s CEO. Maxeon Solar has been incorporated and will be headquartered in Singapore, and its ordinary shares are expected to be traded on Nasdaq. Maxeon Solar will own and operate solar cell and panel manufacturing facilities and maintain its R&D, marketing and sales footprint outside of the United States and Canada.
Concurrent with the transaction, an equity investment of $298 million will be made in Maxeon Solar by long-time partner Tianjin Zhonghuan Semiconductor (TZS), a premier global supplier of silicon wafers, to help finance the scale‐up of Maxeon 5 production capacity.
The separation is expected to occur through a spin‐off of all the shares of Maxeon Solar held by SunPower to SunPower shareholders, followed by the TZS investment. It is intended to be tax-free to SunPower shareholders. After the completion of these transactions, TZS will own roughly 28.8% of Maxeon Solar and about 71.2% will be owned by SunPower shareholders.
We believe that the solar industry is entering a period of extended growth where success will be driven by value chain specialization, technology innovation and economies of scale. This new structure and investment will create two focused businesses, each with unique expertise to excel in their part of the value chain.
Shares of SunPower traded up about 14% Monday morning to $9.53, in a 52-week range of $4.55 to $16.04. The consensus price target is $10.06.