HONG Kong-listed power company GCL-Poly Energy yesterday said it has agreed to buy a Chinese mainland solar-cell parts maker for HK$26.3 billion (US$3.4 billion).

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GCL-Poly will pay for the purchase of Jiangsu Zhongneng Polysilicon Technology Development Co by issuing new shares to its existing shareholders, it said in a statement to Hong Kong Stock Exchange yesterday. Jiangsu Zhongneng is the nation's biggest supplier of polysilicon, the costliest component in solar panels.

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The transaction is valued at about 10.4 times the audited net profit of 2.2 billion yuan (US$322 million) of GCL Solar as of December 31, 2008. This will include a cash payment of US$200 million, issuance of US$350 million secured note and issuance of 10 billion shares at HK$2.20 per share.

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GCL-Poly is controlled by Chairman Zhu Gongshan, who owns 34.47 percent of the company.

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The transaction is subject to approval by shareholders and the Securities and Futures Commission of Hong Kong.

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China is planning to increase its capacity to produce electricity from sunlight by five times by 2020.

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"Backed by strong government support the future of the solar industry is promising and the group is well-positioned to capitalize on these opportunities," Zhu said.

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GCL-Poly owns or controls 18 thermal power plants, one incineration power plant and one wind power plant on the mainland.