Another Indian company bids for European major | business | Hindustan Times
Today in New Delhi, India
Sep 26, 2017-Tuesday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Another Indian company bids for European major

An increase in global demand for renewable sources of energy prompts Suzlon energy to bid for German wind turbine maker.

business Updated: Apr 12, 2007 11:51 IST

After Tata Steel acquired Corus, the next Indian company to bid for a global major is Ahmedabad-based Suzlon Energy, which has entered a multi-million euro bidding war to take over German wind turbine maker REpower.

Suzlon Energy is India's biggest builder of wind farms, and is run by billionaire businessman Tusli Tanti. As increasing global energy needs prompt a shift to alternative sources of energy, the company is well placed to drive the global market.

Suzlon Energy made a bid that was well over the one made by French rival Areva, which had started with a euro 105-a-share offer. Suzlon Energy offers euro 126-a-share, which promoted Areva to revise its offer to euro 140-a-share.

Suzlon Energy Tuesday responded by increasing its offer to euro 150-a-share, worth euro 1.2 billion (820 million pounds). The bidding war needs to be seen in the context of the Global Wind Energy Council declaring that the global market grew by 32 percent last year.

Energy industry sources say that growing interest in the international auction is mainly due to the rapid growth in the demand for wind power at a time when there is pressure on various countries to meet carbon emission targets.

Suzlon chairman Tanti said: "Our offer price of euro 150 per REpower share is very attractive for all shareholders. The decision to increase the offer was taken after careful analysis and review of potential synergies that Suzlon can contribute to REpower given our fully integrated business and control over component level technology and its integration with turbine technology.

"We are happy that the management of REpower has supported our industrial plan and strategy. We have already commenced a working relationship in several aspects of the business and are confident of achieving a steady reduction in raw material costs for REpower. We clearly see REpower emerging stronger and Suzlon will be one of the key catalysts in its future development."

Andre Horbach, Group CEO of Suzlon based in the global headquarters in Amsterdam, said: "REpower remains a highly strategic asset from a geographical as well as onshore and offshore product mix point of view.

"The market has never been a concern for the entire industry and this will likely continue for the foreseeable future. Most of the industry faces challenges of a reliable and cost-efficient supply chain and that is where the synergies with our vertically integrated supply chain are compelling."

He added: "De-bottlenecking will lead to higher volumes for REpower at marginal costs, resulting in better operating margins. Together, we can strive for a top three position in all key wind markets.

"Our existing credit facilities and internal accruals are sufficient to fund our obligations under the offer. We have the support of our partner Martifer with whom we have a deferred purchase agreement."

Suzlon made its latest offer after snapping up 7.7 per cent of REpower at up to euro 150 a share. It is bidding in partnership with Martifer, part of Portuguese builder Mota-Engil, which owns a quarter of Repower.