Suzlon's chance to bag REpower gets a boost

Suzlon's chances of acquiring German turbine maker REpower brightened today, with its rival bidder Areva not revising its bid at the end of the stipulated period.

Sources close to the development said the last date for Areva revising the offer expired today.

Analysts said Areva still has a window under German rules to scale up its offer.

"Under German rules, Areva can purchase REpower shares from the market even at this stage. But if it buys the company's shares at a price of over ¤150 "" the rate Suzlon is offering "" its offer will automatically be repriced. Even this route will be available to Areva only till May 24," sources said.

In a tussle that began in February, Suzlon and Areva have repeatedly increased their offer price for REpower. At the last instance, Suzlon's offer stood at ¤150 per share of REpower, beating Areva's offer of ¤140 by ¤10 per share.

Areva already owns 30 per cent of REpower shares and Suzlon, along with bidding partner, Portugal-based Martifer, has 32.7 per cent of the German company's shares. If Areva does not revise its offer, Suzlon would need approval from 51 per cent of the shareholders of REpower to carry through the deal.

The REpower board had already cleared Suzlon's offer.

Suzlon would require ¤1.02 billion to finance the offer, if it is fully subscribed. The company has already locked in ¤1 billion of debt. ABN Amro is the adviser for the fund raising.

However, if Suzlon were to acquire only 70 per cent of the shares of REpower, it would need to borrow ¤626 million. The company can pay Martifer over the next two years to buy off the company's 25 per cent stake in REpower.