Indian wind firm lifts German bid

Environmental pressures are driving expansion in the wind business

India's Suzlon Energy has stepped up its efforts to buy a German wind turbine maker, upping a takeover offer and trumping its main French rival.

Suzlon raised its offer for Repower Systems to 150 euros per share, valuing the firm at 1.2bn euros (£817m).

The India company owns a 7.7% stake in Repower, and is competing against France's Areva, which owns 29.6%.

Should it win the battle, Suzlon would be become the world's fourth-largest wind turbine maker.

Pressing issue

Governments worldwide want renewable energy to become more available and more widely used.

High oil prices and concerns about the impact of fossil fuels on global warming have intensified calls for more environmentally-friendly forms of energy production.

As a result, companies have been looking to invest more in wind, solar and wave generation, and analysts said they expect to see more consolidation in the industry.

Suzlon is not making its bid alone and has the backing of Repower's second-biggest shareholder, Portugal's Martifer Group.

Should it win the takeover battle, then Suzlon would control Martifer's stake for two years without making any payment. Martifer would then have the right to sell its holding to Suzlon once the two years were up.

Share fears

Investors have given Suzlon's plans a mixed reception and the company's shares have fallen by about 25% since it announced it may table a bid for Repower.

Many shareholders are worried that the purchase will hurt earnings and weigh on the company's balance sheet because Suzlon would have to take on a lot of debt to buy Repower.

The company tried to ease fears by saying that it expected the deal to have a positive impact on earnings during the year running from March 2009.