Suzlon finalizes REpower purchase

Indian wind power giant Suzlon Energy (NSE:SUZLON) said today it expects to control 90.72 percent of Germany’s REpower Systems (ETR:RPW) by the end of next week, after agreeing to the final payment schedule following months of delay caused by market upheaval.

Suzlon agreed to pay €175 million ($245 million) to Portugal’s Martifer (LIS:MAR) for its remaining 16.79 percent stake in REpower, one of Germany's biggest wind turbine manufacturers. The payment is expected in two tranches: Suzlon paid €87.6 million yesterday to bump its stake to 83.43 percent, and Suzlon agreed to pay another €87.6 million on June 5 to reach 90.72 percent.

Suzlon says it funded the acquisition by renegotiating financial covenants and bank loan facilities to adjust the required debt-to-equity balance. Suzlon is the world's fifth-largest turbine manufacturer.

Shares of Suzlon were up 7.88 percent at the close of trading today, while REpower shares were up 8.07 percent. Shares of Martifer were down 4.89 percent.

Suzlon acquired a 66-percent stake in Hamburg-based REpower almost three years ago for Rs 7,314 crore ($1.55 billion). Suzlon announced plans in September 2008 to buy Martifer’s 22.48-percent stake by Dec. 15 of that year (see Windy dealmaking leads the week).

But that plan was de-railed as market concerns caused Suzlon to cancel a a €270 million ($360 million) rights issue to fund the acquisition. Then in November, Suzlon said negotiations were back on as the company planned to sell shares to finance an expansion that included the acquisition (see Report: Suzlon resumes bid for REpower shares).

Earlier this month, the founders of Suzlon raised $47 million through the sale of 2 percent of their shares (see Wind giant Suzlon sells off 2 percent stake).