When news breaks that a company is in talks to be acquired, pundits are often quick to point to it as a positive sign. But in reality, it all depends on the valuation and the price of the deal. Over the past couple of days the Financial Times and Reuters have reported that Ausra, the solar thermal startup with a Silicon Valley pedigree, is in talks to be acquired by three potential companies. Both reports cite sources that say the potential buyers are global conglomerates in the power generation business and that the discussions could result in a buyout or a majority investment. No word on a valuation or potential price.
At this point I agree with the Financial Times when it says the news is part of “the consolidation that’s sweeping through the solar industry.” Siemens announced last month that it’s buying solar thermal firm Solel and firms in other solar sectors are being snapped up as well (MEMC Electronic Materials, a company that makes silicon wafers for the solar industry, announced that it plans to buy up SunEdison, a pioneer of the solar as a service business model).
Over the past year Ausra has changed it’s strategy from looking to build and operate solar thermal power plants — using mirrors and lenses to capture the suns heat and turn it into electricity — to providing its equipment to solar power producer. Building and operating these solar power plants would have taken a ton of financing, which, in a hard economy, would have proven to be a difficult route.
Proof that Ausra was continuing down this new path emerged earlier this month, when the company announced that it is selling the Carrizo Energy Solar Farm project, a proposed 177MW project still under development in San Luis Obispo, Calif., to industry thin film solar giant First Solar (s FSLR). And in September Ausra said it had been chosen to provide its equipment for a 100MW concentrated solar thermal power project being developed in Ma’an, Jordan.
Ausra declined comment on the reported acquisition talks and deal, but Katherine Potter, Vice President, Communications, Ausra, told us: “As our recent string of announcements have shown, our business strategy of focusing on being a solar steam systems provider is working and producing results.”
But for Ausra’s investors, which include Kleiner Perkins, Khosla Ventures, Al Gore’s Generation Investment, Alberta, Canada-based KERN Partners and Melbourne, Australia-based Starfish Ventures, they’re going to need a sizable exit to consider the sale a success. Ausra has raised around $130 million to date and was founded in 2006.
In comparison 14-year-old Solel, which raised at least $100 million and employs several hundred people, was bought for $418 million. Solel claims a revenue of nearly $90 million for the first half of this year, thanks to a solar receiver supply business and its work engineering, planning and building solar fields. Solel was also continuing down the path of building and operating solar thermal plants when it was bought up, unlike Ausra. However, Ausra’s advanced technology is supposed to be its differentiator, which is difficult to put a price on.