Counter offer exceeds Areva's earlier bid by 20%

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Aiming High

Suzlon has

made a 1.021 million (almost Rs 6,000 cr) counter bid.

Its all

-cash offer of 126 per REpower share tops Areva offer of 105 per share.

MumbaiFeb. 9Suzlon Energy Ltd on Friday launched a 1.021 million (almost Rs 6,000 crore) counter bid for German wind energy company REpower Systems AG, trumping French nuclear engineering firm Areva SA's earlier bid.

Suzlon's all-cash offer of 126 per REpower share tops Areva's offer of 105 per share.

Suzlon, in a statement, said it would bid for the company in a consortium with Martifer SGPS, SA, Oliveira de Frades of Portugal. A new special purpose vehicle has been formed for the acquisition, with Suzlon holding 75 per cent and Martifer 25 per cent.

Deal with Martifer

Suzlon and Martifer have signed a legally binding agreement, which sets out the terms for this offer. Part of the agreement is that Suzlon will finance the offer and Martifer will support it.

Suzlon said that its offer competes with the February 5 public tender offer of Areva for REpower. Suzlon's counter-offer price exceeds the price offered by Areva by 20 per cent, with the offer price being higher than any historic share price of REpower. The offer price represents a premium of 76 per cent on the average volume weighted share price of REpower over the last three months prior to the offer announced by Areva on January 22.

Mr Tulsi Tanti, Chairman & Managing Director of Suzlon, said that if the company won the bid for REpower, its global market share will increase from the current level of 11 per cent to 14.5 per cent. The combination of REpower and Suzlon is positioned to establish sustainable global market leadership in the wind energy industry, with good R&D capabilities and an integrated supply chain.

Hamburg shall remain headquarters of REpower. Suzlon said it plans to create 100 to 200 R&D jobs in Germany.

Raising money

Mr Tanti said that the bid money would be raised from debt and internal accruals. The debt component has been tied up with ABN Amro Bank and two other Indian banks. Interestingly, both Martifer and Areva are major shareholders of REpower. Martifer, currently, holds a 25.4 per cent stake, while Areva owns 29.9 per cent. Martifer has a joint venture with REpower in Portugal.REpower Systems AG is a leading wind turbine producer in Germany with offices in Hamburg, Husum, Rendsburg, Trampe and Osnabrück. The company is headquartered in Hamburg, with production facilities in Husum and Trampe. Suzlon's interest in overseas acquisitions and expansion coincides with a global demand for green power projects as governments are seeking to cut carbon emissions linked to global warming and reduce their dependence on oil.

(This article was published in the Business Line print edition dated February 10, 2007)
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