Germany-based SMA Solar is to acquire Danfoss’ solar inverter business.

Danfoss will acquire 20% of SMA’s shares with a value of €302 million (US$415 million) in return for selling its inverter unit.

It will receive SMA shares at a price of €43.57 50% premium on the average price during (US$59.86) the past 60 days.

The alliance between SMA and Danfoss brings together respectively the world's largest and seventh largest inverter manufacturers by market share, according to an IHS study published in May.

“The strategic alliance with Danfoss strengthens SMA’s leading position in the global photovoltaic market. We are faced with a highly competitive market environment and increased price pressure,” said Pierre-Pascal Urbon, chief executive of SMA.

“In this context, SMA will benefit from Danfoss’ years of experience in automated drives. This market has been characterised by fierce competition for a long time. Accordingly, the strategy of the Danfoss group targets continuous cost improvements through global sourcing and cost down initiatives. By establishing a close cooperation there is significant potential to improve the cost position in both companies,” added Urbon

The inverter market has been hit by the emergence of bigger utility projects that require larger but fewer inverters, and the rise of new players in the microinverter market that have stolen share in the residential sector.