UPDATE 1-Vestas shares jump on report of takeover interest
* China's Sinovel and Goldwind mull bids for Vestas-paper
* Companies have financial capacity for bids - analyst
* Vestas shares jump 15 percent, outperform wider market (Adds details, share prices, quote)
COPENHAGEN/HONG KONG, April 16 (Reuters) - Shares in the world's biggest wind turbine maker, Vestas Wind Systems , jumped 15 percent on Monday after a newspaper report said two Chinese rivals were looking into launching takeover bids for the Danish company.
China's biggest wind turbine maker Sinovel Wind Group and No.2 Xinjiang Goldwind Science & Technology Co have discussed the possibility of making bids with bankers, Danish daily Jyllands-Posten said on Monday, citing unidentified people in the corporate finance industry.
Vestas shares, which have plunged over 50 percent since October in the wake of two profit warnings, were up 14.8 percent at 56.20 Danish crowns at 0835 GMT, outperforming a 0.7 percent rise in Copenhagen's benchmark share index and valuing the firm at about 11.5 billion crowns ($2 billion).
"Vestas would be a strong acquisition target for either Sinovel or Goldwind," said Keith Li, analyst at CIMB research.
"Goldwind is very aggressive and has plans to expand downstream and operate wind farms. Acquiring Vestas will offer a platform for further global expansion and boost product branding," Li said.
He said Chinese wind turbine makers suffer from branding problems as customers sometimes perceive Chinese technology to be inferior to that of Western rivals.
"Though both could be encountering limited earnings growth due to the tough market situation, money to acquire Vestas won't be a problem as they could go for bank financing. Both have the backing of the state and could obtain bank financing if needed," Li said.
The wind industry has been hit by overcapacity, sliding turbine prices and cutbacks in support for renewable energy by governments trying to plug deficits.
Sinovel shares were little changed at 16.10 yuan in Shanghai, while Goldwind was down 6.5 percent in Hong Kong after it warned last week its first quarter profit could be wiped out.
Goldwind and Vestas declined to comment on the newspaper report. Sinovel could not be immediately reached for a comment.
Vestas's profit warnings have piled pressure on Chief Executive Ditlev Engel to tackle rising costs and ensure there are no more disappointments.
In January, Vestas announced a major management reshuffle as well as plans to cut 2,335 jobs in a bid to restore profitability after higher costs wiped out 2010 earnings.
On Friday, Vestas shares closed at 48.95 Danish crowns, compared with a record high near 700 crowns per share in 2008.
The two Chinese companies could be hampered, however, by Vestas' large and diverse shareholder base, as this could make it difficult for them to win support for a deal from over 90 percent of investors, Jyllands-Posten said.
($1 = 5.6859 Danish crowns) (Reporting by Mette Fraende in Copenhagen and Leonora Walet in Hong Kong; Editing by Mark Potter)
- Tweet this
- Share this
- Digg this