Suzlon Taps Into Europe With Deal for REpower [WSJ Asia]
By JOHN SATISH KUMAR
May 28, 2007
MUMBAI -- Suzlon Energy Ltd. of India will pay as much as €1.3 billion ($1.75 billion) to buy wind-power turbine maker REpower Systems AG, after rival bidder Areva of France agreed to end the bidding process for the German company.
With a combined manufacturing capacity of 3,700 megawatts, the joint entity will become the world's fourth-largest wind-turbine maker by market share. Suzlon currently ranks fifth.
Suzlon Chairman Tulsi Tanti said Suzlon's management will meet with REpower and Areva management in a few weeks to discuss synergies. Mr. Tanti said there will be no job cuts at the German company. Instead, he said, Suzlon will look to add staff and accelerate growth.
Areva -- which holds nearly 30% of REpower -- agreed to vote with Suzlon on strategic decisions involving REpower. In return, Areva after one year has the right to sell its shares to Suzlon at a price to be determined at the time of the sale.
Suzlon's joint-offer partner, Portuguese steel and metal-building company Martifer, holds a 23% REpower stake, which it has agreed to sell to Suzlon in two years for €265 million.
Mr. Tanti predicted that as a result of the acquisition, the percentage of Suzlon's revenue coming from oversees markets will rise to 80% in three to four years, from 50% now. "Half the world's market is Europe, and the highest margins also are in that market," he said. "We already have a strong presence in India, U.S. and China, but this buy will make us strong in the largest market." |
