Suzlon acquisition by Vestas hits roadblock, shares tank 25%

Global wind turbine maker Vestas Wind Systems' offer to acquire Suzlon Energy had expired on June 3 without any headway. Valuation difference was the prime reason for roadblocks in closing the transaction, sources with direct knowledge told CNBC-TV18.

Denmark-based Vestas had offered nearly a billion euros to buy a majority stake in Suzlon, which included debt resolution with the lenders, CNBC-TV18 had reported in February. Vestas was looking to acquire Suzlon's stake from the promoter Tulsi Tanti and investor Dilip Shanghvi, and launch an open offer for its shares as part of the deal.

Suzlon Energy shares fell as much as 25 percent intraday on Monday to Rs 3.9 per share over concerns on its debt repayment ability after the deal talks failed.

In a May 31 stock exchange notification, Suzlon had stated, “The company is working towards a resolution plan with the lenders and has received a nonbinding offer from a potential investor, which we are informed is currently valid till June 3, 2019 (the terms of the non-binding offer provide for extension of the validity period of the offer on an exclusive basis as may be mutually agreed by the parties)”

Proceeds of the deal were crucial for Suzlon to meet its debt and foreign currency convertible bond obligations worth around Rs 1,300 crore in the June-July period. Suzlon has close to Rs 8,000 crore debt.

"We are committed to reducing our debt and are progressing on strategic initiatives being undertaken," Suzlon told CNBC-TV18, while refused to comment on specific discussions with any specific party at this point.

Vestas said, “As stated previously, Vestas’ strategy is based on organic growth and as the market leader our focus remains on executing an extraordinarily busy 2019. We will give no further comment on such speculation and refer to Suzlon for more clarity on their situation”

Vestas had in February said to CNBC-TV18, “Vestas’ strategy is based on organic growth and as we have said before on similar speculation, our industry-leading position means we are open to additional bolt-on opportunities to accelerate our growth strategy should such arise.”

Suzlon said that it plans to reduce debt by 30-40 percent in FY19. Tulsi Tanti & family own 17.60 percent stake in Suzlon. Dilip Shanghvi had acquired 23 percent stake in Suzlon in 2014​.