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10 October 2019

How will Nordex fare in the hands of Acciona?

Spain’s Acciona will be forced to make an offer to acquire Nordex, after raising its share in the German wind turbine maker to over 30%. But if it all of that goes ahead, the future of Nordex hangs in the balance.

The €99 million increase in Nordex’s capital will see Acciona’s stake in the company rise from 29.9% to 36.27%. As this lies above the 30% ceiling, German regulations mandate Acciona to make an official takeover bid, with a proposed offer of €10.32 per share. Based on share prices over the past three months, this values Nordex at €1.1 Billion.

Nordex accepted the initial investment from the Spanish project developer amid turbulence within the energy industry. Pressure has been applied through the provision of government subsidies to competitive tenders, causing smaller turbine manufactures to fall behind the big three suppliers outside China: GE, Siemens Gamesa and Vestas. Delivering a net loss of €92.6 million by mid-2019, Nordex will hope that investment from Acciona will help close the gap.

What is likely behind this move is that Acciona has a €400 million plus wind under current build and possibly 3 X that over the next few years, based almost entirely on Nordex turbines. If it does not buy it out, it will lose this pipeline.

€1 billion or so seems to be the going rate to buy one of the existing troubled wind turbine makers. Senvion in Germany may change hands for a little less than that given that Siemens Gamesa has entered exclusive discussions to acquire it, but its revenues have fallen to around €800 million, but it can confer about 15 GW to Siemens Gamesa’s service contracts. Meanwhile in India in August Suzlon fell to bankruptcy by defaulting on loan repayments after Vestas said it was willing to pay €1 billion to buy the business and it also had around 15 GW of installed turbines.

Acciona acquired its original stake in Nordex in 2016, as Nordex acquired Acciona Windpower – so it has been in the wind turbine business before and we doubt very much that it genuinely wants to acquire Nordex, except to protect its pipeline of business.

Acciona’s half year figures to end of June show that out of 9.8 GW of electricity capacity some 7.8 GW of it is wind. It also has some hydro and biomass projects.

The addition of capital, which came at Nordex’s proposal, intends to “protect Acciona’s investment in Nordex” said investor relations chief Raimundo Fernandez-Cuetas.

A full acquisition would see Acciona increase its standing debt by 15%, although the €1 billion investment is potentially less than what may be at stake if Nordex simply fails.

Wood Mackenzie has predicted that with possibilities to reduce costs, Nordex is well placed to hi-jack major customers from larger turbine-makers. It is likely however that Acciona will just want to minimize the disruption to its own business, and may let future R&D for Nordex wither on the vine, and transition to a new partnership once this generation of projects is over.

As turbines rapidly get larger and move offshore, Nordex will need to plough serious money into R&D to keep up with the technological advances of the big three manufacturers. So it looks to us that Acciona will be tentative in this move and may simply run Nordex as a way to complete projects, at a minimum cost, and sell the business on with a development promise to one of the big three, with the addition a partnership deal.