Wind turbine maker Suzlon Energy on Monday said it had received an offer from German company ZF Friedrichshafen to buy its 26 per cent stake in Belgian turbine gearbox manufacturer Hansen Transmissions.
ZF Friedrichshafen, an auto parts manufacturer, has offered 66 pence per share for a controlling stake that will result in a cash flow of $187 million (Rs 830 crore) to the debt-laden Suzlon.
AE-Rotor Holding, a wholly-owned subsidiary of Suzlon, which owns the stake in Hansen, is obligated to accept the offer under an undertaking that will lapse if a third party intends to make an offer for Hansen's shares for a consideration that is at least 12.5 per cent higher than ZF’s offer.
Suzlon has been selling stake in Hansen progressively since it purchased the entire stake in 2006 (See table). If this sale goes through, it will mark Suzlon’s exit from the firm.
“This is in line with our strategy to optimise and strengthen our balance sheet. Suzlon and Hansen have developed a strong partnership on technology and supply chain. Hansen has a significant presence in low-cost manufacturing while maintaining technological edge and reliability. We expect this partnership to continue and strengthen over the mid-term,” said Tulsi Tanti, founder, chairman and managing director of the Suzlon group, in a statement issued on Monday.
The directors of Hansen announced that they consider the terms of ZF’s offer to be fair and reasonable and have unanimously recommended the shareholders of Hansen accept it. Hansen is listed on the London Stock Exchange.
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ZF and Hansen also indicated the offer represents a premium of approximately 95.6 per cent over the closing price of 33.75 pence per Hansen share on July 22, the a business day prior to the announcement. The offer is also at a 60.2 per cent premium over the volume-weighted average price of 41.19 pence per share for the three-month period ended July 22.
If the offer goes through, the deal will inject much needed to liquidity into Suzlon’s balance sheet, which has a debt of Rs 12,100 crore.
The company also has two tranches of foreign currency convertible bonds, which will mature next year, with a total outstanding of $332 million (Rs 1,460 crore).
In addition, Suzlon also needs cash for the squeeze out proceedings, which it has initiated for the acquisition of residual stake in German company Repower. The company, which already has over 95 per cent stake in Repower, is planning to acquire the rest of the stake and fixed a compensation for the same last week, which will cause a cash outflow of Rs 400 crore.
The stock of Suzlon Energy went up three per cent on Monday, to close at Rs 54.50 per share, according to data available at the Bombay Stock Exchange. “Suzlon has been under shadow for a while and for the last two years, the stock has been a laggard. Any positive news is a welcome relief,” said Jagannadham Thunuguntla, strategist and head of research, SMC Global Securities.