Chinese solar wafer manufacturer ReneSola said on Wednesday that it will buy Dynamic Green Energy Ltd for about $88.5 million, mostly in stock, expanding the parts company into the market for solar panels, the final product sold to produce energy.

ReneSola's ADSs closed up 2.5 percent at $6.01 on the New York Stock Exchange on Wednesday as the company also updated its revenue views for the third quarter and full year and said it would issue 14.4 million ADRs.

ReneSola shareholders will buy all of Dynamic Green shares for 26.8 million ReneSola ordinary shares and $10 million in a convertible promissory note issued by ReneSola, the company said in a statement.

American Depositary Share representing two ordinary shares each of company stock closed at $5.86 on Tuesday on the New York Stock Exchange, which would value the stock portion of the deal at $78.5 million.

Dynamic Green manufactures solar products, including wafers and solar photovoltaic panels, through its wholly-owned unit Jiawei Solarchina Co Ltd and other Chinese operating units. Dynamic Green has long-term contracts with U.S. solar companies SunPower Corp and Evergreen Solar.

ReneSola's move to buy Dynamic Green will accelerate the implementation of our strategy to become a fully integrated solar company, said Xianshou Li, ReneSola's chief executive, in a statement.

The lack of financing for solar projects has contributed to a glut of panels in the market, which has sent prices lower and prompted expectations of consolidation in the industry.

ReneSola also lowered its view of third-quarter revenue to between $130 million and $140 million. In August, the company's CEO Li said they expected losses in the third quarter despite a new 150 megawatt project.

The company expects its revenue for 2009 will reach between $470 million and $500 million. That is a lower range than the company forecast in August and also below the $558.81 million that Wall Street was expecting for the year, according to Reuters Estimates.

It was not immediately clear whether the company's updated forecasts for the third quarter and 2009 included the Dynamic Green Energy deal.

The company held its shipment view of 450 megawatts to 500 MW for 2009.

ReneSola also said that it will offer 14.4 million American Depositary shares to pay for capital expenditure, working capital and to repurchase and redeem bonds.

Both companies' board of directors have approved the acquisition and share purchase deal and at closing, ReneSola said it will enter into the shareholders' agreement as well as other agreements related to the deal. (Reporting by Laura Isensee, editing by Leslie Gevirtz)