By Thom Rose/Bloomberg
Frankfurt: Areva SA, the world’s largest manufacturer of atomic power stations, raised its bid for German wind-turbine builder Repower Systems AG, countering an offer by Suzlon Energy Ltd of India and valuing the company at 1.14 billion euros ($1.5 billion, Rs6,600 crore).
Paris-based Areva offered 140 euros a share for the 70% of Repower it doesn’t already own, the company said on 15 March. Ahmedabad-based Suzlon last month topped the French company’s initial 105-euro price with a bid of 126 euros a share.
The increased offer coincides with a global surge in wind-power projects as governments seek to cut carbon emissions linked to global warming and reduce their dependence on oil. Repower last month said it won orders valued at about 92 million euros from Electricite de France SA for turbines in the UK and France.
“Renewable energies are very interesting for Areva, especially since they offer a way to diversify away from nuclear power,” said Jean-Michel Salvador, an analyst at Fideuram Wargny in Paris with a “reduce” rating on Areva shares. “The problem may be that the price seems to have gotten a bit disconnected from reality.”
Repower shares jumped 17.79 euros, or 14%, to 149.49 euros and were trading at 148.08 euros before noon in Frankfurt. The stock has more than doubled since December, giving the company a market value of 1.20 billion euros.
The latest offer is a 56% premium on the company’s closing share price on 19 January, the last day of trading before Areva announced its first bid.
Areva, which became a Repower investor in 2005, plans to use its network of utility customers to drive sales of wind turbines. Hamburg-based Repower has operations in France and elsewhere in Europe and aims to expand in China, India and North America.
“The increased offer reflects Areva’s strong engagement for Repower and its management,” said the company, which is majority-owned by the French state. The bid is part of a strategy to expand its renewable energy business, said Areva, which has already agreed to buy enough Repower shares to give it a 30% stake.
“We have noted Areva’s offer and are awaiting complete details,” Suzlon spokesman Vivek Kher said in a telephone interview from Pune. “We will evaluate the offer once we have complete information and will respond accordingly.”
Repower management said on 19 February that Areva would be a “fitting strategic partner,” without endorsing either bid. Suzlon managers met with Repower on 2 March and said the German company was “interested” in Suzlon’s offer.
Increasing demand enabled Repower, Germany’s third-largest maker of wind-power equipment behind Vestas Wind Systems A/S and Enercon, to post full-year profit of 7.1 million euros, against a year-earlier loss of 6.8 million euros.
Suzlon’s bid is being made in partnership with Martifer, a unit of Portuguese builder Mota-Engil SGPS SA that already owns a quarter of Repower. Martifer described its stake in Repower as “strategic” but wouldn’t say whether it would sell the shares.
Areva said on 5 March it had received European Union antitrust approval for its bid. The offer period ends on 20 April.
—With reporting by Archana Chaudhary in Mumbai