CATL is in talks to buy photovoltaic module supplier DAS Solar, which ranked No. 8 globally in PV module shipments in the first half of this year, according to local media.

CATL, the world's largest power battery maker, is looking to acquire a photovoltaic (PV) module and photovoltaic cell company, and is currently in talks to acquire DAS Solar, local media outlet LatePost reported today.

DAS Solar was founded in 2018 and ranked No. 8 globally in PV module shipments in the first half of this year, the report noted.

Before approaching DAS Solar, CATL had attempted to acquire a 51 percent stake in another PV module maker, Jiangsu Runergy New Energy Technology, for RMB 4 billion ($562 million), the report said, citing several people familiar with the matter.

However, PV giant Tongwei beat the competition by bidding RMB 5 billion for a 51 percent stake in Runergy, the world's fifth-largest maker of PV cells, setting a record for mergers and acquisitions in China's PV history, the report noted.

Tongwei announced the deal in an exchange announcement on August 14, saying Runergy would become its controlling subsidiary upon completion of the deal.

Growth in China's power battery industry has slowed in recent years, and CATL, which has plenty of capital, has investment needs, the LatePost report noted.

CATL began approaching a number of PV module companies in the second quarter, but several investors believe that the top six companies in the PV module market -- JinkoSolar, Longi, Trina Solar, JA Solar, Atlas, and Canadian Solar, would not choose to sell themselves, according to the report.

All six companies are publicly traded, have more access to financing, and have relatively ample cash reserves to survive into the next upswing in demand, LatePost said.

Of the top 10 PV module companies in global shipments, the only ones that aren't yet listed are Runergy and DAS Solar, which were among the few suitable targets for CATL, the report said.

After missing out on Runergy, CATL is running out of options, the report said.

DAS Solar also understood this and offered more than 1x PB, but CATL thought the price was too high and the two sides are still negotiating, the report said, citing a person familiar with the matter.

Talks for CATL to buy DAS Solar could be concluded within a month, and apart from CATL, there are other PV industry companies approaching DAS Solar, the report said.

The ability to manufacture its own PV modules would enhance CATL's vertical integration in the new energy sector.

There is also a window of opportunity for M&A of PV assets now, after the sector's valuations plummeted in early 2023 due to overcapacity.

This year, the PV industry is once again entering an M&A cycle, so CATL is beginning to look to consolidate the PV industry in an attempt to become a more fully-fledged energy giant, LatePost said.

($1 = RMB 7.1163)

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