Indian business news channel CNBC-TV18 reported on 22 February, citing unnamed sources with knowledge of the negotiations, that talks between the two companies were underway.
"We gather from sources with direct knowledge that Vestas is interested in buying a controlling stake in Suzlon, and then launch an open offer for the shares," said CNBC anchor Nisha Poddar.
Following the reports, a Vestas spokesman released a statement: "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.
"Vestas will give no further comments at this point, but will of course comply with applicable laws and regulations, including the release of company announcements if or when required."
Suzlon share price increased 50% to INR 5.61 ($0.0789) following the rumours, but refused to comment on the CNBC-TV18 report.
Jacob Pedersen, stock analysis manager at Sydbank, said he would be "somewhat surprised" if Vestas would go ahead with the deal, given Suzlon’s ongoing "deep financial distress".
"I can see the attraction to get a strong foothold in the Indian market, but all that comes with a cost. It could be a drag on Vestas for some time," Pedersen said.
Suzlon reported its nine-month financial figures in early February, with a 31% fall in gross profit year-on-year.
Ebitda also fell 68% to INR 2.65 billion ($37 million) across the nine-months to the end of December. Suzlon blamed a "lower operating leverage" on the fall.
The firm has been battling high levels of debt of several years, which, in part, led to the sale of Senvion to Centerbridge Partners in 2015.
However, the firm reported a 2.1GW turbine order backlog and ambitiously predicted India could rebound to an 11GW market beyond 2021. The country installed a little over 2GW in 2018.
Pedersen added while the high levels of debt at Suzlon could allow a good deal for Vestas, there would be additional restructuring and alignment costs.