Decoding the behind-the-scenes of TCL Zhonghuan's acquisition of a new energy company!

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TCL Zhonghuan has acquired a company called Yidao New Energy. This matter has been circulating in the market for several months, and the deal terms have just been finalized.

Before the deal, Yidao New Energy had 57 shareholders. TCL Zhonghuan was able to reach old-share transfer agreements with 50 of them, get all shareholders to waive the performance/earn-out agreement, and have the majority of shareholders accept the capital increase price…… Negotiating this by itself was especially difficult.

So, did TCL Zhonghuan just pick up a bargain, or did it end up with a hot potato? What exactly did TCL Zhonghuan see in Yidao New Energy? When other leading photovoltaic companies have clearly said they will not pursue photovoltaic industry M&A, why did TCL Zhonghuan insist on acquiring Yidao New Energy?

0****1

A former black horse—Zhonghuan drove the price down to 800 million!

Whether a deal is worthwhile depends most on the price!

Yidao New Energy’s historical valuation is public and has kept changing. In July 2023, at the Pre-IPO financing stage, Yidao New Energy’s post-investment valuation was about RMB 7.75B.

Yidao New Energy filed for an IPO on the ChiNext board of the Shenzhen Stock Exchange on December 29, 2023, and the review was terminated on August 16, 2024. If calculated based on the proposed fund-raising of RMB 2.5 billion and a post-issuance shareholding ratio of ≥10%, the post-issuance company valuation would be about RMB 25 billion.

Of course, later the photovoltaic market changed dramatically. First, financing conditions in the capital markets tightened. Photovoltaic companies could no longer obtain the high valuations in the A-share market, and in some cases were not even recognized or accepted. At the same time, the market environment for photovoltaics took a sharp turn for the worse. Yidao New Energy itself was also facing persistent cash burn, and slid into losses.

The longer Yidao New Energy suffered in the cold spell, the more its net assets depreciated—every day.

Now that Yidao New Energy has made it this far, its valuation has been “slimming down” by several rounds compared with its peak.

So what is Yidao New Energy’s valuation now? Or, how much is TCL Zhonghuan willing to pay to take over Yidao New Energy?

This transaction is structured in two steps, as follows:

(1) TCL Zhonghuan plans to use cash of RMB 258 million to acquire, from the HuZhou Zhidao Enterprise Management Partnership (Limited Partnership), SuZhou Shanshi Equity Investment Partnership (Limited Partnership), and other 50 shareholders in total, 8.06% of Yidao New Energy’s shares. Based on this, the average price per share is RMB 6.05, and the overall valuation of Yidao New Energy is RMB 3.2 billion.

(2) TCL Zhonghuan plans to use cash of RMB 1.00 billion to increase capital into Yidao New Energy and obtain a 55.56% stake in Yidao New Energy after the capital increase. Based on this, the pre-investment valuation of Yidao New Energy is RMB 800 million, and the post-investment valuation is RMB 1.8 billion.

(3) If calculated based on TCL Zhonghuan obtaining 59.14% of Yidao New Energy’s shares for RMB 1.26B, then the overall post-investment valuation of Yidao New Energy would be RMB 2.13B.

In addition, TCL Zhonghuan will accept delegated voting rights for a total of 7.20% of shares held by five employee-shareholding platforms—HuZhou Zhihui Enterprise Management Partnership (Limited Partnership), HuZhou Zhongzhi Enterprise Management Partnership (Limited Partnership), HuZhou Zhixin Enterprise Management Partnership (Limited Partnership), HuZhou Linzhi Enterprise Management Partnership (Limited Partnership), and HuZhou Ruizhi Enterprise Management Partnership (Limited Partnership)—as well as by the founder, Liu Yong.

However, Yidao New Energy has a total of six employee-shareholding platforms. The largest platform is HuZhou Zhidao Enterprise Management Partnership (Limited Partnership). It was originally Yidao New Energy’s second-largest shareholder. Before the transaction, it held 17.46%; after the transaction, it holds 6.98%. The consideration for the transferred shares was RMB 19.60 million, making it one of the exits with the largest proportion in this deal.

All in all, we can draw a conclusion: the “real money” TCL Zhonghuan pays out will basically be injected into Yidao New Energy, to ease Yidao New Energy’s financial difficulties, and to support its business development.

So, in acquiring Yidao New, did TCL Zhonghuan pay too much, or did it get it for too cheap?

From today’s perspective—namely the net-asset perspective—definitely it is not worth RMB 800 million. If we look from a historical perspective—an asset reset perspective—then it is certainly a great deal. Prior to this, Yidao New Energy had already raised more than RMB 3 billion in the equity market alone.

But investment is about the future!

To measure Yidao New Energy, we should use the future perspective—looking at what value Yidao New Energy can create for TCL Zhonghuan!

0****2

The value of Yidao—an armor-tested team!

For TCL Zhonghuan, what is the core value of Yidao New Energy? Or, what exactly did TCL Zhonghuan “bet on” in Yidao New Energy?

It’s certainly not just cold-blooded equipment!

Carbon Number thinks it is an excellent team.

Yidao New Energy was founded on August 8, 2018. This was the first company founded by people in the photovoltaic industry itself in the most recent round of the photovoltaic cycle. It was also a black horse that ran the fastest in the battery module segment.

This shows that Yidao New Energy’s team is very professional and can take on hard fights!

Yidao New Energy has achieved notable results and established a certain market position. Since 2023, among N-type module tenders, it ranks near the top nationwide. It has accumulated years of R&D reserves in different application scenarios, BC battery technology, and other areas.

It submitted its ChiNext IPO application on December 29, 2023. Judging from its financial condition at that time, Yidao New Energy’s performance was no worse than certain photovoltaic companies that had already listed, and also no worse than some crossover new forces.

But its luck was very bad—the IPO got tightened.

Enterprises without capital-market platforms are naturally not as resilient as listed companies. This can be described as “bad timing.”

Worse still, Yidao New Energy developed too smoothly and ran too fast, making it difficult to “brake.” This is also the shared weakness of all black horses that run fast. Therefore, when the photovoltaic market outlook turned sharply for the worse, Yidao New Energy struggled to adapt to these changes—it had no experience and no preparation.

However, TCL Zhonghuan has experience in withstanding the winter and the cycle. As a leading silicon wafer company, TCL Zhonghuan has experienced all the cycles in photovoltaic history.

The experience of withstanding the winter and the cycle is even richer for the controlling shareholder, TCL Technology. Coming from the white goods industry, TCL Group deeply understands how the home appliance industry gets reshuffled—far more brutal than the photovoltaic industry!

Although this time involved a transfer of 8.06% of old shares (a consideration of RMB 258 million), the proportion is very low. In particular, no shareholder achieved a truly comprehensive exit. Everyone has to work with TCL Zhonghuan and weather the difficulties together.

First, the founder Liu Yong did not exit even 1 share. He must solve the difficulties together with Yidao New Energy and TCL Zhonghuan. His interests are deeply bound with those of Yidao New Energy and TCL Zhonghuan.

Additionally, there are six investment institutions—Qingdao招商公路创新股权投资基金合伙企业 (Limited Partnership), Beijing Ruihui Haina Technology Industry Fund (Limited Partnership), and Suzhou Neurly Newcheng Equity Investment Partnership (Limited Partnership) Enzehehai (Tianjin) Equity Investment Fund Partnership (Limited Partnership), Shanghai Zhiyi Chengyin Asset Management Center (Limited Partnership), and Hangzhou Purui Shushan Yang Equity Investment Partnership (Limited Partnership)—none of them transferred old shares. These six not transferring old shares likely means internal procedures were not fully completed; or they simply were unwilling to exit.

Second, 50 shareholders transferred old shares, but the transaction prices were not the same, and the majority of shareholders only transferred an appropriately small amount of shares.

The lowest transaction price was by Suzhou RuizuoSi Environmental Technology Partnership (Limited Partnership), at RMB 1 per share. The executing partner is Fan Kaichen (a director of Yidao New Energy). He currently holds shares both through the limited partnership and directly holds shares of Yidao New Energy, which means his interests are still deeply tied to Yidao New Energy.

Among the 50 shareholders, 24 of them transferred old shares at a transaction price as high as RMB 14.65 per share. They were the last batch of “rush investors” who entered before Yidao New Energy’s IPO.

The announcement also explains: “The share transfer price is determined based on the subscription cost of each counterparty.”

This approach likely also helped stabilize the sentiment of old shareholders, while giving them hope. Among these old shareholders are famous capital and industrial capital players. They will very likely contribute to synergy between Yidao New Energy and TCL Zhonghuan’s development, and will also be more motivated to push the company forward together with the listed company.

In addition, the transaction prices for founder Liu Yong, other entrepreneurial executives, and early employee-shareholding platforms were also transferred at cost. No one truly profited from this transaction.

This prevents the “poor temple, rich monk” situation from happening. Unlike some M&A deals where founders, controlling shareholders, and other shareholders exit pro rata while the company’s operations end up a mess, but the founder has already achieved financial freedom and is living comfortably.

03

No company is more suitable than TCL Zhonghuan to acquire Yidao New!

How should we look at Zhonghuan’s acquisition of Yidao New?

If we set the bar higher, we can say: this acquisition aligns with industry development trends. During the industry integration period, the company carries out market-oriented M&A and restructuring to integrate high-quality technology and capacity, and better empowers the transformation and upgrading of the photovoltaic industry.

A former photovoltaic black horse that can be revitalized through M&A and restructuring should not be allowed to go bankrupt and be liquidated. TCL Zhonghuan’s acquisition of Yidao New Energy is to help Yidao New Energy out of trouble, to ease worries for local governments, and to deliver timely help to Yidao New Energy’s employees.

However, fundamentally, this is still a business deal!

Acquiring Yidao New Energy is an important move for TCL Zhonghuan to further lay out its module business, accelerate the company’s moderately integrated strategy, and make up for weaknesses.

In the 2022 round of the photovoltaic integration wave, only TCL Zhonghuan remained calm. But in the end-consumer side—this is the final outlet of an industry. Upstream needs to understand the end market better.

In addition, the controlling shareholder, TCL Technology, comes from the home appliance sector itself, so it understands users very well. Therefore, when it builds photovoltaic power stations and photovoltaic modules, it naturally has strong advantages.

In the photovoltaic winter, even before TCL Zhonghuan planned to acquire Yidao New Energy, it had already proposed a moderately integrated strategy, and it had already adopted dual brands, TCLSolar and SUNPOWER, to deploy globally.

This strategy has achieved positive results:

First, on the global front in 2025, the company’s photovoltaic cell and module segment achieved operating revenue of RMB 8B, up 60.45% year over year. Revenue accounted for 32.10% of total sales. Photovoltaic module shipments reached 15.1GW, ranking it within the global module shipment volume TOP10 list.

This year, module performance has also been outstanding. On March 18, in the public notice of the winning candidate for the centralized procurement project of China Power Construction that will cover photovoltaic module framework purchasing for 2026, TCL Zhonghuan successfully made it into Package 1 (N-type TOPCon modules, estimated total volume 24GW) and Package 3 (BC modules, estimated total volume 4GW), totaling 31GW across the two core bid segments. After China Huadian’s 8GW double bid segments were fully won, TCL Zhonghuan then used an N-type all-scenario product solution to capture the industry’s annual centralized procurement at a large scale. Within just half a month, TCL Zhonghuan consecutively secured centralized procurement orders from two state-owned power enterprises, bringing the cumulative awarded/selected scale to nearly 40GW.

Second, on the global front in 2025, the company has made breakthroughs in markets such as Asia-Pacific, Latin America, and the Middle East and Africa. Overseas sales for the battery module business have grown by more than twofold. Investment and construction projects in the Middle East and the Philippines are being advanced step by step based on the market and local conditions.

What Yidao New Energy does is cells and modules, and the complementarity with TCL Zhonghuan’s moderately integrated and global strategy is the strongest. If Yidao provides support, TCL Zhonghuan’s market position will certainly be significantly enhanced.

Of course, TCL Zhonghuan also has a small plan—leaning into BC to build a BC ecosystem. Now BC technology is gradually rising, and in specific scenarios such as distributed generation it has unparalleled advantages. It is also endowed with unparalleled advantages in high-efficiency module tenders.

These advantages are also reflected in the most attention-grabbing and most core patent areas. As of December 31, 2025, the company had accumulated 4,763 valid authorized intellectual property items. Among them, authorized invention patents were 606 in China, utility model patents were 1,812, design patents were 24, trademarks were 277, and software copyrights were 52. Authorized patents outside China were 1,992. Subsidiary Maxeon’s total BC-related patents: 1,900+ items (including granted + pending review), covering 30+ countries/regions. TCL Zhonghuan is more suitable than any other company to do BC modules. Of course, to consolidate the BC camp and build a BC ecosystem, it needs more companies and more capacity to implement BC technologies. Yidao is one of the earlier and deeply invested BC technology players in China. In 2020, it used the TOPCon passivation contact structure on the back side and started R&D for DAON-BC (DBC) at Yidao New Energy. There is clearly a degree of tacit understanding between TCL Zhonghuan and Yidao on BC.

Epilogue

Will TCL Zhonghuan’s acquisition of Yidao create another M&A miracle like Tongwei’s acquisition of Sivi?

In the photovoltaic winter of 2013, Tongwei Co., Ltd. acquired Sivi, which was in crisis, and established Tongwei’s dominant position in photovoltaic cells today.

Carbon Number has no doubts about that. Semiconductor display panels (panels) are a typical strong-cycle, heavy-asset industry, and they are also where TCL’s counter-cycle strategy originates. In the context of the 2009 financial crisis—at the industry’s lowest point—TCL entered the field and established Huaxing Optoelectronics. During the second round of industry retracement in 2013–2015, TCL also expanded capacity against the trend to improve its full product matrix. In every cycle, TCL endured massive losses and cash flow pressure during industry troughs, along with market criticism—but it also welcomed spring and achieved outsized returns.

Different fields, but essentially the same principle. Those who master the craft can enable all undertakings!

In the photovoltaic winter, we welcome M&A and restructuring happening, hoping the industry can emerge from the low point quickly, and we are more willing to witness the birth of miracles.

Where will TCL Zhonghuan’s acquisition of Yidao go from here? Carbon Number will continue to pay attention.

Carbon Number is also willing to be a witness, a recorder, and a loud voice in the photovoltaic winter.

Edited by: Zhen Carbon