BERLIN, Germany (UPI) -- A French energy giant and India`s largest wind power firm are battling to take over German wind energy company REpower in what observers say may be the starting shot for further consolidation on the European wind energy market.
It is an exciting takeover battle that pins Suzlon Energy, India`s largest wind energy company, against French state-controlled nuclear energy giant Areva; both firms have issued lucrative bids for shares of Germany`s REpower, Germany`s third-largest maker of wind-power equipment after Vestas Wind Systems and Enercon.
Areva offered $138 per share, a price that was topped last week by Suzlon owner Tulsi Tanti, who wants to dish out as much as $166 per REpower share, a bid that estimates the deal at a staggering $1.3 billion. Suzlon`s bid is backed by the Portuguese Martifer group, a 25-percent REpower shareholder; Areva already owns 30 percent of REpower shares.
Observers say the bidding process, which has already caused REpower shares to skyrocket, will continue for at least another month or two, and the Paris-based energy company (with nearly 59,000 employees the world`s largest producers of nuclear reactors), is expected to further raise its offer to compete with the Indians.
While much pointed into the direction that Areva with its initial offer would be able to quickly pocket the German company, Tanti with the higher offer, a convincing concept and much groundwork with company and city officials in Hamburg was able to tip the scale in his way.
Tanti told Hamburg Mayor Ole von Beust the city would remain the host to the company`s headquarters and promised to create a technology center with 100 to 200 highly qualified research and development jobs; von Beust has in turn guaranteed the 48-year-old that the city will assist in finding a cheap and suitable location for such a center.
The advantages for Tanti are obvious: He would get access to the technology edge the Germans have built up in the past years, after cutting-edge research and development. Apart from engineering made in Germany, REpower`s customer base and its know-how in offshore wind plants are helpful to the Indians, who could, in turn, supply REpower with parts that it still needs to get from outside firms, observers say.
A team-up with REpower, Suzlon said in a statement, would help the firm to become 'uniquely positioned to establish sustainable global market leadership in the wind industry with outstanding R&D capabilities and an integrated supply chain.'
Tanti has in the past flexed his financial muscles: Suzlon, market leader in Asia and the world`s fifth-largest wind turbine manufacturer by annual installations, has been on an expansion course ever since it invested $60 million in a wind turbine manufacturing unit in China; that move was followed in March 2006 by the acquisition of Belgium-based Hansen for $565 million.
The takeover battle comes in the wake of an increasing demand for wind energy, to reduce carbon dioxide emissions given the much-heralded threats of global warming.
The market for European wind power capacity broke new records in 2006, according to the annual statistics compiled by the European Wind Energy Association, an industry group. Some 7,588 Megawatt of wind power capacity, worth roughly $11.8 billion, was installed last year in the European Union, an increase of 23 percent compared to 2005.
While REpower with its anticipated 2007 sales of some $850 million already is a global player, many German wind energy firms remain medium-sized despite their advantages over competitors when it comes to technology, engineering and research and development.
That may eventually hurt them now that a takeover series is expected by analysts in light of the booming renewable energy industry.
'If the Germans don`t adapt in time, then the eco-wave will not wash them forward, but simply crush them,' the Financial Times Germany newspaper said recently in an editorial.
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