* Vestas confirms talks
* Mitsubishi could buy 20 pct for 200 mln euros - analysts
* Analysts say takeover unlikely
* Vestas shares hit three-month high
(Adds details, analyst comments, updates share price)
By Mette Fraende
COPENHAGEN, Aug 28 Ailing wind turbine maker
Vestas is in talks with Japan's Mitsubishi Heavy
Industries which could result in a much-needed capital
injection, sending its shares sharply higher.
The talks could centre on the industrial conglomerate
investing up to 200 million euros ($250.3 million) in return for
a 20 percent stake in Vestas and access to some of its
technology, possibly for offshore turbines, analysts said on
Vestas, the world's largest wind turbine manufacturer which
has been hit by government cuts to renewable energy subsidies,
is more likely to be looking for a partner than a buyer for the
whole company, they added.
The Danish company has been the subject of takeover
speculation after it agreed with its banks to delay a check on
whether it would meet loan covenants and issued two profit
warnings due to manufacturing problems that wiped out 2011
Its shares jumped nearly 18 percent at the stock market open
in Copenhagen on Tuesday, hitting a three-month high and traded
up 15.5 percent by 1005 GMT against a flat benchmark index
"Vestas needs cash so without having to go to market, they
are trying to see if anyone wants to take a stake," Sanford C.
Bernstein analyst Martin Prozesky said.
Vestas Chief Executive Ditlev Engel has been under pressure
to restore investors' confidence following the profit warnings
in January and last October.
The company last week unveiled plans for 1,400 more job cuts
to save an extra 100 million euros ($125 million), as it
battened down the hatches for another difficult year in 2013.
A cash injection from Mitsubishi would only be a short-term
solution, as the company needs to generate cash in the future,
Vestas' debt stood at 1.15 billion euros at the end of June
and said last month it had a free cash outflow in the second
quarter of 338 million euros, more than the previous three
Some form of tie-up between the two groups, which have both
invested heavily in 7 megawatt offshore wind turbines, could be
attractive, another analyst said.
"It is a strategically good match," said Sydbank analyst
Jacob Pedersen. "I do not believe (it will lead to) ... a
takeover by Mitsubishi, but I believe in a strategic
co-operation within the area of offshore wind turbines,"
Such a deal would raise Mitsubishi's technology
significantly and strengthen Vestas' financial position, he
The company said late on Monday it was discussing a
"strategic cooperation," and declined to give details.
($1 = 0.7990 euros)
(Editing by Erica Billingham)