First Solar Inc (FSLR.O) said on Monday it would pay rival OptiSolar $400 million in stock for its pipeline of solar projects, including a major installation for California utility PG&E Corp (PCG.N) and other nascent deals that will rapidly expand the company's presence in the U.S. utility market.
The deal, which First Solar Chief Executive Mike Ahearn called a "watershed acquisition" for the company, includes 1.3 gigawatts (GW) of solar development projects currently being negotiated with utilities in the U.S. West and 136,000 acres of strategic land rights that have the potential to deploy up to 19 GW of additional solar projects.
The addition of projects that are already at various stages of development to First Solar's existing pipeline will "catapult us into a whole new league," Ahearn said on a conference call to discuss the deal.
"This package, in total, we think would be very hard to replicate at all and certainly not without many years of work," Ahearn added.
Going forward, the projects will incorporate First Solar's cadmium telluride solar panels rather than Hayward, California-based OptiSolar's amorphous silicon panels.
Both solar technologies are considered "thin film," meaning they are cheaper to produce than traditional crystalline silicon panels.
Last year, OptiSolar made headlines when it secured a deal to build a 550-megawatt solar power plant in Central California for PG&E's Pacific Gas & Electric.
Then earlier this year, the privately-held company cut 300 jobs, or half its workforce, and halted the construction of a manufacturing plant because it could not secure the funding it needed to expand. That lead the company to "entertain a partner," Ahearn said.
Also on the call, First Solar executives said the deal would add about $70 million to 2009 revenue, but would decrease earnings per share for the year by 35 cents to 40 cents a share.
The deal is expected to add to earnings "modestly" in 2010.
First Solar shares rose about 2.9 percent to $107 in extended trading following the announcement. The stock closed at $103.97 on the Nasdaq after falling $1.77, or 1.7 percent, in regular trading.