Suzlon Energy, the world’s fifth largest wind turbine maker, will acquire 22.48 per cent stake from Portugal-based Martifer SGPS in its subsidiary REpower Systems of Germany for €270 million (Rs 1,744 crore) or €131 per share, eight months ahead of the original time-frame to acquire the stake.
“The completion of the agreement will take Suzlon’s stake in REpower to about 90 per cent and put both companies in a stronger position to derive synergies from the collaboration,” said Tulsi Tanti, chairman and managing director, Suzlon. The stake owned by Mortifer was bought at a mutually agreed price from the market by Suzlon, said a company official. The deal is slated to be completed by 15 December, 2008.
This stake buy is a part of Suzlon’s deal, which was signed two years ago, with French energy major Areva and Portugal’s real estate group Martifer - the two major shareholders in REpower at the time of its acquisition two years ago for €1.35 billion (about Rs 7,314 crore). Suzlon made its initial tender offer for the shares of REpower supported by Martifer in February last year.
The deal was structured in such a manner that Suzlon would buy Martifer’s stake within two years for a price of €265-270 million.
In May, Tusli Tanti told Business Standard that the company had firmed up syndicated loans to fund the acquisition of Areva and Mortifer shares, which required more than Rs 7,000 crore.
Tanti today also said the company would look at selling off stake in REpower as a business strategy, since its share price has appreciated nearly 90 per cent since the acquisition. Suzlon acquired about 30 per cent stake of major shareholder Areva three months ago, to take Suzlon’s holding in REpower to approximately 66 per cent.
The binding agreement with Areva during the time of acquisition gave Suzlon the voting rights of Areva.
Areva was also named as preferred electricity distribution and transmission company for Suzlon in Europe.
The acquisition comes at a time when Suzlon is also facing issues relating to the quality of its products. It had to undertake a Rs 120 crore-plus blade retrofitting programme in the US for some of the turbines it sold in the country. It has also been reported that some of the domestic customers of Suzlon are also not happy with the output from the turbines supplied by the company.