Australian
Friday 5/9/2008 Page: 22
Suzlon Energy, the world's fifth-largest wind turbine manufacturer by sales, is moving ahead of schedule to consolidate its takeover of Germany's REpower Systems, a move that will speed the transfer of technology between the two companies. Suzlon, based in Pune, India, has faced concerns about its technology after blades on 2.1-megawatt turbines sold in the US to Deere and Co, and Edison Mission Energy, began splitting last year. Customers in India also have complained their turbines did not generate as much power as expected.
In a bid to improve its technology, Suzlon agreed last year to take over Hamburg-based REpower in a deal that valued the German company at $US1.7 billion. Analysts applauded the tie up, which will give Suzlon access to REpower's cutting-edge technology, including blueprints for large offshore wind turbines.
Suzlon has been unable to draw on REpower's technology because of a strict German corporate law aimed at protecting minority shareholders. The law requires that foreign investors taking over German companies reach a so-called domination agreement before they can transfer technology or profits out of a target company. Such an agreement involves getting 75 per cent of shareholders on board and offering by tender to buy out minority shareholders.
Suzlon said this week it planned to push for a domination agreement to be concluded in "due course" according to German law. It is setting up the agreement to be in place faster than originally planned. Under last year's deal, Suzlon was to increase its initial 34 per cent stake in REpower in stages until May next year.
The company also said this week that it has reached a deal to pay Portugal's Martifer SGPS 270 million for Martifer's 22 per cent stake in REpower, five months ahead of schedule. That purchase will take Suzlon's overall holding in REpower to about 90 per cent. Analysts said Suzlon's move was a positive one aimed at assuaging concerns over its technology.
A spokesman for Suzlon, Vivek Kher, said the REpower takeover was driven by a desire to penetrate the European market and get access to large offshore wind turbines, not for other technology. "Transferring technology or manufacturing REpower products in India were never the objectives of the takeover," Mr Kher said. "The domination agreement however, will ease all round co-operation between the two companies for the mutual benefit of all stakeholders in both companies."
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