Suzlon to acquire 100% stake in REpower

Wind turbine maker Suzlon Energy is all set to acquire the residual stake in German company REpower, to get 100 per cent control of the company. On Monday, it notified the board of REpower to initiate squeeze-out proceedings with respect to minority shareholders.

"The management board of REpower must take steps regarding the squeeze-out procedure. This will result in REpower being a wholly-owned subsidiary of the company. Raising the stake will give Suzlon control over REpower's cash and technology,” Suzlon Energy said in a statement.

Under German law, the owner of 95 per cent stake in a company is entitled to a squeeze-out procedure where minority shareholders' stake can be acquired on a compulsory basis. Suzlon, both directly and indirectly, holds 95.16 per cent of the registered share capital of REpower. Since 2007, Suzlon increased its stake in the company by buying out other shareholders like Martifer and Areva. Its shareholding stood at 92 per cent in 2009.

For a squeeze-out procedure, Suzlon has to appoint bankers to value the minority stake. The valuation will be validated by a court, in this case the district court of Hamburg. The court will appoint its own valuators to check if the minority shareholders are fairly compensated.

"The squeeze-out will be subject to additional expenditure, completion of procedural steps and timing requirements as may be required by German laws and regulations," Suzlon said. Sources said Suzlon is raising $150 million through foreign currency convertible bonds (FCCBs), mainly to fund the acquisition.