To control about 75% equity; shares soar by up to 22%

Our Bureau

MumbaiMay 25After five months of high-profile bidding, Indian wind turbine maker, Suzlon Energy Ltd has finally won the 1.35-billion (about Rs 7,314 crore) bid to acquire German wind power company REpower, with a cash outflow of 250 million.

The drama playing out in Europe on Thursday, unveiled itself on the Indian stock market in the early hours of Friday, sending Suzlon shares soaring by up to 22 per cent on the news that Suzlon had bagged the deal after French nuclear major Areva, (the other contender for REpower) threw in the towel on Thursday night.

Suzlon said that it would control about 75 per cent equity in REpower after closing of the European market on Friday. Areva said it would not raise its 140-a-share offer. It had initially offered 105 per share in January.

Suzlon had offered 150 per REpower share, valuing the German wind turbine maker at around 1.2 billion ($1.6 billion). This price increased to 1.35 billion after a capital increase.

Speaking to the media after clinching the deal, Mr Tulsi Tanti, Chairman and Managing Director of Suzlon said that Suzlon now owns and has managing control in REpower. It also has voting rights from both Martifer and Areva on the board, he said.

Structured control

"It is a good structured financial engineering deal by which without owning 100 per cent of REpower, we have the full control of REpower. Areva will retain its stake of over 30 per cent in REpower. But it has signed a binding agreement that would give Suzlon the voting rights of Areva in REpower. After one year, Areva has the option to sell its shares to Suzlon at the market price reigning at that time.

Martifer, a unit of Portugal's largest builder Mota Engil, and Suzlon's partner during the bidding process, has 23 per stake in REpower. Suzlon will buy Martifer's stake within two years for a fixed price of 265 million.

Suzlon's shares closed at Rs 1,378.45, up 18.94 per cent on the BSE.

Related Stories:
Suzlon, Areva war for REpower in final stage
REpower bidding war enters next phase
Areva offers more than Suzlon for German turbine co

(This article was published in the Business Line print edition dated May 26, 2007)
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