Germany okays Suzlon bid for REpower

Suzlon Energy, India's largest producer of wind turbines, has received approval from the German regulator - the German Federal Financial Supervisory Authority (BaFin) "" for its bid for REpower Systems. Suzlon has offered Euro 1.2 billion ($1.33 billion) to acquire Germany's third-largest wind power company, Repower Systems AG.

The approval for the "friendly" offer means that the offer period has started and REpower shareholders can tender their shares. The offer period will end on April 20.

This offer competes with the public tender offer of French nuclear-reactor maker Areva, which was published on February 5, 2007.

Areva currently holds a 29.4 per cent stake, while Martifer "" the Portuguese steel and metals company, with which Suzlon has partnered for the bid "" owns 25.4 per cent in Repower.

Through the publication of the Suzlon Offer Document, the offer period of Areva, originally set to end on 7 March, will also be prolonged until 20 April 2007.

On being asked if he would raise the bid in case Areva decides to raise its bid, Suzlon Chairman and Managing Director Tulsi Tanti told reporters in teleconference that he was confident of winning the bid.

Though they haven't had any contact with Areva during this period, Tanti said "we are open to talks".

Suzlon's management has discussed the industrial plan with REpower and sought their support, said Tanti. The REpower management is likely to come up with their plan within a few days.

REpower would give Suzlon an access to the mature wind market of the Europe, which has 45 per cent of global share. The company is first focussing on high growth markets of China and the US and then it would explore other markets like Europe, Australia etc.

The Suzlon offer price represents a premium of 76 per cent on the average volume weighted share price of REpower over the last three months prior to the announcement of the offer by Areva on 22 January 2007.

REpower would need fresh capital in a phase-wise manner and the company would have to raise capital and debt. However, Suzlon will provide financial support whenever required. In the next five-six years, nearly 25 per cent of Suzlon business would come from Repower business, he said.