Fighting them off to stay independent -- Nordex attracts predators

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Speculation over the future of troubled wind turbine maker Nordex reached new heights last month when chairman Stefan Klebert made a precipitous departure from the company just as rumours erupted over a potential pending sale of WestLB bank's 29.8% share of Nordex to American conglomerate Caterpillar. WestLB is the largest single stakeholder in Nordex.

Klebert left after just a month in office, ostensibly for "personal reasons." But a partial takeover of Nordex by a major engineering conglomerate -- with its own ideas for business strategy -- would have made the post of chairman irrelevant. Caterpillar is a manufacturer of construction and mining equipment, diesel and gas engines and industrial gas turbines.

Since the rumours of a deal between WestLB and Caterpillar emerged in early September, there has been no confirmation from any of the parties of talks. Neither is there any indication that Nordex would welcome Caterpillar as a significant owner. Klebert's sudden departure, after an enthusiastic arrival at Nordex from the Haushahn Group, might indicate that Caterpillar's appearance on the scene came as a surprise. Caterpillar has facilities in Kiel and Rostock where it builds large marine and diesel engines. Nordex' production facilities are concentrated in Rostock.

Cheap option

Nordex has been touted as an object for takeover for over a year, with American and German power station builders postulated as potential buyers. Currently operating at a loss, Nordex could be a cheap option for a company seeking an entry to the wind market. Nine month figures released in September revealed earnings before taxes and interest (EBIT) deep in the red at EUR 48.9 million. Of this, EUR 20.1 million of the loss was run up in the third quarter and further losses are expected for the fourth quarter. Turnover fell by 30% over the period to EUR 206 million, with annual turnover to reach just EUR 230 million compared with EUR 440 million the previous year and EUR 347m in 2000/2001.

uncertain future

But with proposals to change the law governing the German wind market adding uncertainty to a market already in decline, interest in Nordex is not expected to be keen. "With current market uncertainties I could imagine that a buyer may only be prepared to do an asset deal, with no bonus for company value," says Stefan Gäde, wind analyst at HSH Nordbank in Hamburg. Indeed, press reports claim that Caterpillar is willing to pay only a symbolic price. Meantime, is it far from certain that WestLB is yet ready to cut its losses in Nordex.

A WestLB representative says: "WestLB does not currently intend to shed its participation. We are supporting the Nordex restructuring plan. This has begun and will be completed." The implication is that a divestment could take place when the company is back on its feet. The rescue plan, drawn up with the help of consultant company Roland Berger, should take 18 months to implement, reveals Nordex.

Nordex "aims to survive as an independent company," says the firm's Felix Losada. It will concentrate on key markets in Europe. The marketing office in the US is being slimmed down to leave only a service base, he says. "We are re-engineering our turbine technology, have introduced a service concept and are improving sales."

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