Standard Oil Co. of Indiana (Amoco) completed its $12 million acquisition of Solarex Corp. yesterday after waiving a condition of the takeover agreement with a subsidiary of the Rockville-based solar-energy company--but the action could force Standard to pay more for the company.
Amoco's takeover of Solarex, of which it already owned 38 percent, puts the nation's three largest solar electric cell operations under the ownership of major oil companies. Atlantic Richfield Co. and Exxon Corp. also own companies that make cells that turn sunlight into electricity.
But the takeover rescues Solarex from the brink of financial disaster. With markets for its solar cells not materializing, the company, a pioneer in its field, has been in "a very critical state," according to an Amoco executive who also sits on Solarex's board. The company, which lost $9.8 million last year on revenues of $19.7 million, has been having severe cash flow problems, according to several sources.
To complete the takeover, which was approved by Solarex stockholders on Thursday, Standard waived a condition in the takeover agreement that would have blocked the acquisition. The condition was contained in the agreement to take over Semix, a subsidiary partially owned by Solarex that makes raw silicon that Solarex turns into solar cells. Because Standard's offer for Solarex was contingent on the simultaneous acquisition of Semix, any problems with the Semix deal would have blocked the acquisition of Solarex.
The condition prevented Amoco from acquiring Semix if more than 10 percent of Semix's shareholders asked courts in Delaware, where Semix is incorporated, to appraise the value of their stock and decide whether Amoco's $15-a-share offer for Semix was fair. The Delaware courts could order Amoco to pay the dissenting shareholders more money for their shares.
On Thursday, representatives of a group of mostly European shareholders holding about 12 percent of Semix, said they had asked for an appraisal. They base their argument on the fact that Amoco has paid as much as $96 a share for Semix stock in the past couple of years. Amoco, however, argues that the precarious financial condition of Solarex and Semix has severely reduced the values of the two companies in recent months.
By waiving the clause, Amoco agreed to take its chances with the Delaware courts' appraisal of Semix stock, a process that will take months. In addition, 8 percent of Solarex's shareholders have asked the courts to appraise the value of their stock, for which Amoco is paying $2.50 a share.