Chinese consider buying Vestas

A potential purchase of Vestas by Chinese competitors may face challenges by Vestas’ shareholders

April 16th, 2012 10:47 am| by admin
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Rapidly expanding Chinese wind companies Sinovel and Goldwind are reportedly exploring the opportunity to buy the Danish wind giant Vestas.

According to Jyllands-Posten's sources, individuals in corporate finance have been drafted in to assess the possibility of a Chinese takeover of the troubled Vestas. The windmill manufacturer has seen its share price plummet after disappointing results, leadership issues and increasing competition.

Sources told Jyllands-Posten that a Chinese purchase of Vestas could signify the beginning of the end for windmill production in Denmark, and could cost thousands of Danish jobs.

"If the Chinese purchase Vestas, there is nothing that says that the company will continue to produce anything in Denmark," an anonymous source said.

Vestas's troubles have been well-documented. In 2008, before the financial crisis started to grip, Vestas’s share price almost topped 700 kroner, but has since dropped to 49 kroner.

But while the drop in share price has made Vestas more attractive to buyers, its diffuse ownership sets challenges for interested buyers.

“It’s not a given that Vestas can be sold,” an anonymous source told Jyllands-Posten newspaper. “With its thousands of shareholders, the company has little direction. It’s not certain that 90 percent of them would agree to a buyout. For instance, investors from Jutland who bought at 300 may still turn down the opportunity to sell at 100 even though it is currently closer to 50.”

As of February 29, Vestas had 181,000 named shareholders who together owned 93 percent of the company’s shares. Some 45 percent of the shares are thought to be in foreign hands.

A second challenge faced by a potential buyer is that despite the recent hardship faced by the company, it remains the world’s largest windmill producer and is valued at 10 billion kroner, making it a substantial financial commitment.

“A purchase would require the involvement of Chinese state investment funds,” an anonymous source told Jyllands-Posten.

The Chinese state investment fund, CIC, was established in 2007 with the goal of investing China’s enormous currency reserves. In January this year, the fund made its first purchase in the UK when it bought a nine percent stake in the British water company Thames Water as part of its strategy of investing in European infrastructure.

In 2011, Vestas was the leading deliverer of wind energy as measured by megawatts installed, followed by the Chinese companies Goldwind and Sinovel. 

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