Strategic Move for Activist Shareholders and Value Growth
TL/DR –
REC Silicon is in a corporate governance conflict, with a minority shareholder group led by Water Street Capital opposing a takeover bid by Hanwha Group, arguing the $88.6 million proposition undervalues the company’s assets by over 30%. The potential undervaluation hinges on the growth prospects of silicon anode battery materials and semiconductor-grade polysilicon, integral to REC’s operations, which critics believe Hanwha has overlooked. This conflict exemplifies the tension between controlling and minority shareholders in sectors where asset value is tied to long-term technological trends, not just short-term cash flows.
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REC Silicon, a leader in the silicon anode battery material and semiconductor-grade polysilicon sector, is at the center of a shareholder maneuvering storm. The company is facing a hefty $88.6 million all-cash takeover bid from the Hanwha Group. However, minority shareholders, led by Water Street Capital, argue that this offer significantly undervalues REC Silicon’s key assets by over 30%. The crux of the clash revolves around asset valuation, with a focus on long-term technological trends over short-term cash flows.
Claims of Undervaluation
Minority shareholders have branded Hanwha’s offer of NOK 2.20 per share as a “fire sale” tactic. The Hanwha Group’s low valuation is based on REC Silicon’s recent EBITDA loss of -$4.6 million and its $447 million net debt. Yet, this valuation fails to consider the strategic worth of the company’s Moses Lake silane gas facility and Butte polysilicon plant, both of which represent significant untapped potential. For instance, the Moses Lake plant produces 570 metric tons of silicon gas quarterly, crucial for EV battery manufacturers such as Tesla and Panasonic. Furthermore, the Butte facility is operating at only 60% capacity, meaning there’s room for growth, particularly in semiconductor applications.
Shaking Up the Board
The landscape changed in June 2025 when a board shake-up saw Hanwha-aligned directors replaced with Norwegian representatives. One of the key changes made by the new board has been to initiate investigations into alleged operational manipulation by Hanwha at the Moses Lake facilities. In addition, the new governance model has led to partnerships with innovation-focused companies such as Sila Nanotechnologies.
Facing Financial Challenges
Despite an EBITDA turnaround to $4.9 million in Q2 2025, financial instability remains an issue for REC. The company’s pressing need for restructuring is highlighted by its $8.3 million in cash and $408.3 million in 2026-maturing debt. However, the recent EBITDA uptick from a $1.5 million loss in Q2 2024 suggests that operational improvements could stabilize the business. If the governance reforms are successful, the company’s market capitalization could increase by 20–30%, pending a favorable ruling against Hanwha by the Norwegian Takeover Authority.
Activism Comes to the Fore
Water Street Capital has filed a legal challenge alleging contract manipulation and transparency violations by Hanwha. This move has forced Hanwha to defend its bid in U.S. and Norwegian courts, creating an opportunity for potential higher bids from other interested parties. This activism reflects a growing trend in constrained M&A environments, where minority shareholders use regulatory scrutiny and independent valuations to counterbalance controlling shareholders’ influence.
The Future for REC Silicon
REC Silicon’s situation is more than just a takeover bid. It’s a complex interplay of corporate governance, market dynamics, and high-growth potential. With the silicon anode battery market projected to grow at a 47.1% CAGR, this sector represents a $19.58 billion opportunity by 2033. The key to unlocking this potential lies in the board’s ability to execute effective restructuring plans and secure legal victories. Investors will be watching the Norwegian Takeover Authority’s ruling closely.
Source:
[1] REC Silicon’s Hidden Value: A Battle Against Shareholder Oppression [https://www.ainvest.com/news/rec-silicon-hidden-battle-shareholder-oppression-undervaluation-2507/]
[2] Earnings call transcript: REC Silicon reports Q1 2025 loss, outlines strategic shifts [https://www.investing.com/news/transcripts/earnings-call-transcript-rec-silicon-reports-q1-2025-loss-outlines-strategic-shifts-93CH-4031052]
[3] REC Silicon’s Board Shake-Up: Strategic Implications for Shareholder Takeover Dynamics [https://www.ainvest.com/news/rec-silicon-board-shake-strategic-implications-shareholder-takeover-dynamics-2508/]
[4] Sila Commissions Moses Lake Plant for Silicon Anode Innovation [https://discoveryalert.com.au/news/silas-moses-lake-battery-innovation-2025/]
[5] Silicon Anode Material Market Size and Trends 2025–2033 [https://www.marketgrowthreports.com/market-reports/silicon-anode-material-maket-100033]
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