Wuxi, China-based Suntech Power Holdings (NYSE: STP) said today that it has acquired a minority stake in Yangzhou, China, solar wafer maker Shunda Holdings for $98.9 million.

Suntech, a manufacturer of solar photovoltaic cells and modules, said it purchased the stake from Actis, a private equity investor, and the Waichun Investment Fund.

Suntech also announced a definitive 13 year silicon wafer supply agreement with Shunda. Under the terms of the deal, Shunda will supply Suntech with 7 gigawatts of silicon wafers from 2008 to 2020.

"This strategic investment and long term supply agreement will be instrumental in the profitable and rapid growth of both Suntech and Shunda," said Zhengrong Shi, chairman and CEO of Suntech.

Suntech said Shunda currently supplies a number of major producers of photovoltaic crystalline cells and modules and is in the final stages of building a new polysilicon plant in Yangzhou with a first phase capacity of 1,500 metric tons.

Shunda plans to to initiate production of solar grade polysilicon in the third quarter of this year, according to Suntech.

"Located in our home province of Jiangsu, Shunda's proximity to Suntech will enhance the synergies that we can achieve by integrating polysilicon refinement right through to the manufacture of premium quality solar modules," said Shi.

Suntech said the long-term supply agreement gives a boost to its silicon secured for 2009 to 800 megawatts, up by 50 MW.