Suzlon sells German arm Senvion for €1 billion in all-cash deal2 min read . Updated: 22 Jan 2015, 01:50 PM IST
The transaction is expected to be closed before the end of the current fiscal year
Mumbai: Suzlon Energy Ltd, the world’s fifth largest wind turbine maker, on Thursday said it has signed a binding agreement with a US-based private equity firm, Centerbridge Partners LP, to sell its German subsidiary Senvion SE for €1 billion (around ₹ 7,200 crore today).
“The deal is valued at €1 billion equity value in all-cash transaction and future earn-out of up to an additional €50 million (approximately ₹ 360 crore)," Suzlon said in a statement.
Senvion will give Suzlon licence for off-shore technologies for the Indian market, it said.
Shares of Suzlon rose as much as 7.6% to ₹ 18.50 at 9:17am on Thursday on BSE, while the benchmark Sensex was up 0.36% to 28,992.94.
“The 100% stake sale of Senvion SE is in line with Suzlon’s strategy to reduce debt and focus on the home market and high growth markets such as the US and emerging markets such as China, Brazil, South Africa, Turkey and Mexico," Suzlon said.
On 30 September, Suzlon Energy had a total debt of ₹ 17,323.23 crore on a consolidated basis.
The transaction is expected to be closed before the end of the current fiscal year and subject to regulatory and other customary closing conditions.
Tulsi Tanti, chairman of Suzlon Group, said this in line with company’s strategic initiative to strengthen balance sheet and the proceeds would be used for debt repayment, thereby reducing interest cost and augment business growth.
“Senvion is a company with impressive technology and leading market positions. The global market environment for renewable energies is promising for a wind turbine manufacturer, particularly for one of the most experienced players in the industry with onshore and offshore capability," said Stefan Kowski, managing director at Centerbridge.
Suzlon Energy chairman Tanti on 10 January said the company’s rupee debt stands at ₹ 8,000 crore and it will be reducing it by 50% by the end of this fiscal year. Suzlon Energy also has an equal amount of debt in foreign currencies.
Experts had hailed Suzlon’s Senvion acquisition as a smart move to gain the latter’s technological expertise and access to European markets. Senvion is one of the most profitable assets for Suzlon Energy.
Senvion has made multifold returns for Suzlon Energy in the past. According to a presentation, Senvion revenue gained four times since its acquisition and profit grew eightfold. Senvion has also entered new high-growth markets such as the US, Canada, Australia, Romania, etc., the presentation dated 31 October posted on the company’s website said.
In February 2014, Suzlon Group unit REpower Systems SE changed its name to Senvion SE. The company has been using the name REpower under licence from a Swiss company since 2001.