MUMBAI: Indian wind turbine major Suzlon Energy refuted media reports that French engineering conglomerate Alstom SA is evaluating a potential offer to acquire its subsidiary REpower Systems, saying it was “entirely speculative”.
Shares of Suzlon Energy soared 5% to an intra-day high of Rs 30.75 on a report in the Financial Times Deutschland which said, without quoting sources, that Alstom is working on an offer to buy REpower. According to Financial Times Deutschland, Alstom has been given exclusive access to financial data of REpower which may be sold to the company for 1.5 billion euros ($2 billion).
“The report is entirely speculative. We don’t want to comment further and fuel rumours,” a spokesperson from Suzlon told ET. In an e-mail response to ET’s query, Alstom said, “Alstom would not like to comment on this at the moment.”
Suzlon shares have soared 9% in the last two trading sessions to end at 30 on Wednesday, driven mainly by market speculation. Prior to the REpower stake sale reports, market was abuzz on Tuesday with talk that the company’s Brazilian arm had sold wind farms worth $300 million. Company sources later clarified on Tuesday that the order was part of an earlier deal and would not have any financial implications for the company.
Shares of the loss-making Suzlon Energy have been under pressure for a while on concerns over the company’s ability to repay its debt. In the current year, the company needs to repay holders of its foreign currency convertible bonds $360 million in June and $209 million in October.
“We think the biggest concern for equity shareholders is FCCB repayment due next fiscal (FY13),” JPMorgan said in a report dated February 16. The brokerage expressed concerns over the source of cash identified by the company for repayment, given the poor business climate.
Sector experts said that Suzlon may not consider complete exit in REpower, which is the biggest growth driver for the company. But strategic investors may not be interested in a minority stake in the company.
In 2007, Suzlon Energy, through its subsidiary AE-Rotor Holding B.V., acquired REpower Systems to expand its presence in Europe and to get access to the company’s technology. Although Suzlon gained management control of REpower, it was not allowed access to the company’s technology as the German law does not allow it in the interest of minority shareholders. Suzlon succeeded in completing the acquisition of REpower in September 2011 and made the latter a 100%-owned subsidiary.