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Tuesday, 2 September 2008

Suzlon to buy out Martifer stake in REpower

Our Bureau

Mumbai, Sept. 1 Suzlon Energy Ltd has further increased it stake in REpower Systems AG, the German wind power company which it acquired in May 2007.

It has signed an agreement to acquire the 22.48 per cent held by Martifer SGPS SA of Portugal in REpower for about Rs 1,750 crore (Euro 270 million).

This agreement, which is slated to be completed by December 15, will increase Suzlon’s total holding in REpower to about 90 per cent.

In June Suzlon had acquired about 30 per cent in REpower from Areva of France, taking its total holding in REpower to 66 per cent.

Suzlon made its initial tender offer for shares of REpower supported by Martifer in February 2007. It concluded its offer with an agreement with Areva to acquire the company’s stake in REpower in a phased manner. In May 2007 after months of bidding, it had won the euro 1.35 billion (about Rs 7,314 crore) bid to acquire REpower.

Mr Vivek Kher, spokesperson for Suzlon, told Business Line from Amsterdam that the process of raising the entire funds for the acquisition was completed in May 2007. The payment to all other stakeholders was done in a staggered manner. There is no need to raise fresh funds for buying Martifer’s stake , he said.

Mr Kher said that that since Suzlon does not have ‘Domination Agreement’ with the REpower management there would be no transfer of technology from REpower to Suzlon, “We are happy keeping the two companies separate,” he said.

“If we wanted to buy only REpower offshore technology it would have been much cheaper than buying the company. As REpower technology can be bought for a licences fee,” Mr Kher said.

Under the German Stockholder Corporation Law, the stakeholder holding majority shares has to sign a ‘Domination Agreement’ in order to control the company. Otherwise the ownership and management are two separate entities. The management is not bound by the majority stakeholder’s advice.

Mr Kher said that since REpower was acquired in May 2007 it has been kept separate and Suzlon has adopted a dual brand strategy, where each company will operate in its own market space, he said.

Currently, Mr Girish Tanti and Mr Kirtikant Vagadia are on the supervisory board of REpower.

Source: Businessline

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