North Coast Solar Stocks

November 19, 2007

Applied Materials to buy Baccini for $330 million

Filed under: AMAT — Tags: , , , — Jason @ 9:53 am

By Steve Goldstein, MarketWatch
Last update: 9:53 a.m. EST Nov. 19, 2007

LONDON (MarketWatch) — Applied Materials on Monday said it’s buying a privately held Italian firm, Baccini, for $330 million (225 million euros) to boost its presence in making equipment to create solar panels.

The Santa Clara, Calif. firm said the deal will help it become a leading provider of crystalline silicon cell manufacturing solutions to the photovoltaic cell industry.

Mark Pinto, the chief technology officer of Applied Materials (AMAT), told MarketWatch in an interview that the deal expands its presence in the kind of solar panels used on residential roof tops.

Traditionally, Applied Materials strength is in the thin-film technology where it can sell an entire production line of equipment used to make those panels. With crystalline, the company will still sell individual pieces of equipment.

“Crystalline is a more mature piece of technology,” Pinto noted.

He said the deal to acquire Baccini for $330 million will lift cash earnings in the first year and GAAP earnings in the second year.

Baccini’s revenue this year “will be quite a bit higher” than in 2006, he added.

In opening trade, Applied Materials shares slipped 9 cents.

The Italian deal follows one in August, where Applied Materials paid $483 million for HCT Shaping Systems, a Swiss supplier of precision wafering systems for making crystalline silicon.

He said the Italian firm agreed to be acquired because, like other privately held European players in the solar field, it needs more investment capital.

“They are choosing different paths, some IPO, some private equity and some being acquired,” he said of the European players in the solar space. “Most of the companies aren’t doing this to cash out.”

That said, Pinto pointed out that Applied Materials is probably done making these sorts of acquisitions.

“We’re comfortable between what we have developed internally and what we have bought,” he said.
Pinto added that the deal is especially attractive to Applied Materials because of the hopes for Italy as an end market, with comparatively high amounts of sunlight and lesser amounts of alternative energy sources, like hydroelectric or nuclear power.

Scandinavian countries, by contrast, are relatively poor areas for solar demand because of the low amount of sunlight and abundant amount of hydroelectric power, he pointed out.
“(Italy) is a very good end market, and there’s a good business community in Treviso. We’re quite happy about that.”

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