Nuclear giant hedges its bets -- AREVA bids for Repower

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The French AREVA group, a major global player in nuclear power station construction, has announced a friendly takeover offer for small German wind turbine manufacturer Repower Systems. AREVA already owns 29.6% of Repower, just below the 30% legal threshold in Germany at which a public takeover offer must be made. It has now decided the time is ripe to make a cash offer to all other Repower shareholders EUR 105 a share "corresponding to an attractive premium of 17%" on the price on January 19, 2007 and 44% on the average share price of the previous three months.

It looks likely that Repower's second largest stakeholder, Portuguese construction group Martifer, will be happy to relinquish its 25.4% share. Martifer's participation in Repower was important during the bidding phase for the Portuguese government's 1000 MW wind tender, in which both companies were part of the Ventinveste consortium. Not only did the tender require establishment of local turbine manufacture, but also a commitment for parties involved in manufacturing to stay together until 2013. But with Portuguese utility EDP winning the contract ahead of Ventinveste, the imperative for Martifer's partial ownership of Repower disappeared.

Repower's chairman, Fritz Vahrenholt, welcomes AREVA's offer, stressing that through its commercial and financial strength AREVA can "accelerate the company's future growth." AREVA acquired a 21.1% share in Repower in 2005 when the turbine builder was still in the doldrums. After reporting financial losses in 2004 and 2005, Repower made it back into the black in 2006 on a turnover of around EUR 450 million. For 2007 and 2008, Repower projects a turnover of EUR 650 million and EUR 850 million.

"The combination of the two companies will create a worldwide centre of excellence in wind energy based in Germany," states AREVA. It anticipates that its knowledge of utility customers and grid managers "will benefit Repower significantly." Furthermore, the acquisition "will reinforce AREVA's strategic position in CO2-free energy technologies." The strategy of combining nuclear and renewable energies and transmission and distribution infrastructure "are complementary, all seeking to address the world's growing energy demand without emitting greenhouse gases," it says. AREVA makes no reference to the economic barrier to marrying inflexible base-load nuclear plant output with the needs of variable wind energy generation in electricity systems.

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