China Ming Yang Wind Power Group Ltd. (MY:US), the nation’s third-largest wind-turbine maker, denied being in talks to buy Vestas Wind Systems A/S. (VWS)
“This is not happening so far,” Li Ruixiang, deputy director of the Guangdong-based company’s news office, said by phone yesterday.
Caixin reported yesterday that Ming Yang was seeking to acquire Vestas for as much as 2 billion euros ($2.5 billion) and the deal could be completed by October. Mikkel Friis-Thomsen, a spokesman for Vestas, said the company didn’t comment on speculation.
“The low market share of China Ming Yang and the question mark about financing of the deal make it a less likely prospect,” said Heinz Steffen, an analyst at Fairesearch GmbH & Co. in Kronberg, Germany. “This could be speculation by interested parties seeking to move the share price.”
Vestas, along with General Electric Co. and Siemens AG, is struggling with declining turbine prices and excess capacity as nations from the U.S. to Germany rein in support for renewable energy. Chinese competitors have considered a bid for Vestas, Jyllands-Posten said in April. The newspaper didn’t identify its sources and Vestas declined to comment at the time.
Ming Yang was offered as much as $5 billion in “potential financing” through 2015 from the state-owned China Development Bank Corp. in October to develop its domestic and international operations, the company said at the time.
BTM Consult ApS, a wind industry researcher based in Denmark and a unit of Navigant Consulting Inc., said Ming Yang was the 10th biggest turbine supplier in the world in 2011, with 2.9 percent of the market share. Vestas was the biggest with 12.9 percent.
Vestas fell 2.4 percent to 27.85 kroner at the close in the Danish capital yesterday. The shares have lost 78 percent of their value in the past 12 months.
The stock initially slumped as much as 10 percent yesterday after Jyllands-Posten cited Michael Friis Jorgensen, an analyst at Alm. Brand A/S., as saying that Vestas may need to sell shares to raise capital for its “expensive” restructuring.
“Vestas has no concrete plans about raising capital through a share sale,” Friis-Thomsen, the company’s spokesman, said in an e-mailed statement.
The Sunday Times reported this month that Royal Bank of Scotland Group Plc and HSBC Holdings Plc demanded Vestas submit a comprehensive financial restructuring plan as concerns about its debt mounted.
Vestas detailed restructuring plans in January after issuing a second profit warning in three months. The company in June agreed to sell a Danish turbine-tower factory to Titan Wind Energy Suzhou Co., shelved a U.K. offshore-turbine factory and closed a plant in China to save cash. Its first-quarter loss almost doubled and a new chief financial officer was appointed earlier this year.
“Due to the weak performance in the first quarter, the company’s restructuring mode and the new CFO, the credit banks of Vestas may be tempted to ask the company to raise more capital to reduce their own risk,” Fairesearch’sSteffen said. “If the present situation and weak market continues, sooner or later they may be forced to do something,” he said.
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