(Bloomberg) Sharp Corp., Japan's biggest solar-panel maker, agreed to acquire Recurrent Energy for as much as $305 million in cash as it attempts to expand renewable-energy operations amid increasing competition with Chinese makers.

Osaka-based Sharp will acquire 100 percent of Recurrent and the transaction is expected to be completed before the end of this year, the companies said in a statement yesterday. Closely held Recurrent, based in San Francisco, develops, installs, owns and operates solar-power systems and sells the generated electricity to utilities and other large energy users such as municipalities and commercial customers.

Sharp is trying to gain expertise in developing solar-power systems to diversify its revenue sources amid intensifying competition with photovoltaic-panel makers including Suntech Power Holdings Co. in the global device market. The company is increasing its focus on power plants and real-estate developers to win bigger contracts, Sharp President Mikio Katayama said last week.

"Sharp needs to move on to value-added businesses as the device market has become overly-populated," said Nobuo Kurahashi, an analyst at Mizuho Financial Group Inc. in Tokyo. "Nevertheless, it's a new area for Sharp and won't be easy."

Under the deal, Recurrent isn't obliged to use Sharp solar panels in its projects, and the transaction includes no preferential pricing terms for Recurrent to buy Sharp products, the U.S. company's Chief Executive Officer Arno Harris said yesterday on a conference call.

Sharp gained 1.3% to 857 yen on the Tokyo Stock Exchange as of 12:51 p.m., while Japan's benchmark Nikkei 225 Stock Average slipped 0.1%.

Solar Projects

Recurrent, which is active in the U.S., Canada, France, Spain, Germany and Israel, according to the company's website, said it has contracts to develop more than 330 megawatts of projects. Including those in earlier stages of development, its project pipeline totals 2 gigawatts.

The developer focuses on projects ranging from 2 megawatts to 20 megawatts in capacity because smaller developments require can be approved and installed more quickly and don't require new power lines, according to Recurrent's website.

Teaneck, N.J.-based Hudson Clean Energy Partners, a private equity firm focusing exclusively on renewable energy, invested $75 million in Recurrent in July 2008.

Developer Know-How

"With Recurrent Energy's know-how as a developer, Sharp aims to become a total solutions company in the photovoltaic field, extending from developing and producing solar cells and modules to developing and marketing power generation plants," Sharp Executive Vice President Toshishige Hamano said in the statement.

Sales of solar panels may gain 50 percent in the year ending March 2011, faster than Sharp earlier forecast, because of robust demand in Europe, Katayama said last week. The company said in April solar-device sales may grow 20 percent to 250 billion yen ($2.95 billion) during the year.

The Japanese manufacturer said July 1 it planned to increase its global solar-cell production to more than 1,500 megawatts by March 2013, about double the current capacity. It is also expanding production at its U.K. module factory to 500 megawatts by February after the British government brought in price guarantees for electricity generated by the sun.

Morgan Stanley advised Recurrent and investor Hudson on the deal, Harris said.