Nordex targets world with €785m Acciona deal

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Richard Heap
October 9, 2015
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Nordex targets world with €785m Acciona deal

German manufacturer Nordex this week surprised us by revealing a €785m takeover of the wind arm of Spain’s Acciona. And, if conversations at this week’s RenewableUK conference are anything to go by, the announcement was a surprise to top people in the firms too.

It is not the idea of consolidation among manufacturers that surprises us. Indeed, we said in our 2015 predictions that it would be a big trend this year as firms pool resources in the face of a tough economic climate. We have already seen major deals in the last couple of years from GE and Alstom; Areva and Gamesa; and Mitsubishi Heavy Industries and Vestas.

No, what surprises us is the speed with which this deal seems to have been done. It is rare for such a deal to pass unnoticed through senior management, but this one has. We have a couple of ideas of why that might be but, first, let’s go over the details of the deal.

Nordex has said it would pay €366m in cash to Acciona for the arm, and make up the rest of the transaction cost through the issue to Acciona of Nordex shares worth €419m. The takeover is set to give Acciona a 29.9% stake in the German company.

The deal is subject to approval from competition authorities and is due to complete in the first half of next year. We do not anticipate any competition concerns as there are few markets in which Nordex and Acciona compete head-to-head.

Nordex is active in around 20 countries, but its main interests are in Europe where it has a 10% market share. Globally, however, it has a 3% market share with disparate operations in the likes of South Africa, Turkey and Uruguay.

Meanwhile, Acciona has factories in Brazil, Spain and the US, and is also opening in India. The company has been forced to expand globally after retrospective changes to wind farm subsidies in Spain, which pushed it to a €2bn loss in 2013. This expansion has so far been successful and appears to have put the company on a more stable financial footing.

And it is this focus on stability that may hold the key to this deal.

Nordex has also been through four years where stable growth has been the order of the day. It reported operating losses in 2011 and 2012, but has now grown to an operating profit of €78m in 2014 on sales of €1.7bn. This means that sales and operating profits are almost double where they were in 2010, which shows solid growth but nothing spectacular.

Now Nordex wants more and this deal with Acciona shows that it is looking to put its foot more firmly on the accelerator.

There will not be fast growth in Nordex’s core European markets in the next five years, so the tie-up with Acciona bolsters its overseas operations. Remember, Acciona brought in US private equity firm KKR to invest in its global arm last October, so growth is definitely in its sights. Meanwhile, in Nordex, it looks like Acciona regains a stable base in Europe.

And yet, we still wonder about the speed of the deal. Why so fast?

For that, we have three theories. First, it was not actually a quickly-put-together deal at all. Both management teams are just very good at keeping secrets.

Second, it was a quick deal but the firms are very entrepreneurial and so were able to respond speedily to a deal that is in their mutual interests.

Or third, the pair of them were desperate to achieve their business aims and they jumped at this deal quickly because they thought it was the only one in town.

At this stage it is impossible to be completely sure. We know that Nordex and Acciona are both well-run, and so either the first or second option is most likely. However, if the third is right and they jumped in too quickly then doubtless we will see the cracks emerge over the next couple of years. As with most deals, we will only be able to tell if it worked out with the benefit of hindsight.

German manufacturer Nordex this week surprised us by revealing a €785m takeover of the wind arm of Spain’s Acciona. And, if conversations at this week’s RenewableUK conference are anything to go by, the announcement was a surprise to top people in the firms too.

It is not the idea of consolidation among manufacturers that surprises us. Indeed, we said in our 2015 predictions that it would be a big trend this year as firms pool resources in the face of a tough economic climate. We have already seen major deals in the last couple of years from GE and Alstom; Areva and Gamesa; and Mitsubishi Heavy Industries and Vestas.

No, what surprises us is the speed with which this deal seems to have been done. It is rare for such a deal to pass unnoticed through senior management, but this one has. We have a couple of ideas of why that might be but, first, let’s go over the details of the deal.

Nordex has said it would pay €366m in cash to Acciona for the arm, and make up the rest of the transaction cost through the issue to Acciona of Nordex shares worth €419m. The takeover is set to give Acciona a 29.9% stake in the German company.

The deal is subject to approval from competition authorities and is due to complete in the first half of next year. We do not anticipate any competition concerns as there are few markets in which Nordex and Acciona compete head-to-head.

Nordex is active in around 20 countries, but its main interests are in Europe where it has a 10% market share. Globally, however, it has a 3% market share with disparate operations in the likes of South Africa, Turkey and Uruguay.

Meanwhile, Acciona has factories in Brazil, Spain and the US, and is also opening in India. The company has been forced to expand globally after retrospective changes to wind farm subsidies in Spain, which pushed it to a €2bn loss in 2013. This expansion has so far been successful and appears to have put the company on a more stable financial footing.

And it is this focus on stability that may hold the key to this deal.

Nordex has also been through four years where stable growth has been the order of the day. It reported operating losses in 2011 and 2012, but has now grown to an operating profit of €78m in 2014 on sales of €1.7bn. This means that sales and operating profits are almost double where they were in 2010, which shows solid growth but nothing spectacular.

Now Nordex wants more and this deal with Acciona shows that it is looking to put its foot more firmly on the accelerator.

There will not be fast growth in Nordex’s core European markets in the next five years, so the tie-up with Acciona bolsters its overseas operations. Remember, Acciona brought in US private equity firm KKR to invest in its global arm last October, so growth is definitely in its sights. Meanwhile, in Nordex, it looks like Acciona regains a stable base in Europe.

And yet, we still wonder about the speed of the deal. Why so fast?

For that, we have three theories. First, it was not actually a quickly-put-together deal at all. Both management teams are just very good at keeping secrets.

Second, it was a quick deal but the firms are very entrepreneurial and so were able to respond speedily to a deal that is in their mutual interests.

Or third, the pair of them were desperate to achieve their business aims and they jumped at this deal quickly because they thought it was the only one in town.

At this stage it is impossible to be completely sure. We know that Nordex and Acciona are both well-run, and so either the first or second option is most likely. However, if the third is right and they jumped in too quickly then doubtless we will see the cracks emerge over the next couple of years. As with most deals, we will only be able to tell if it worked out with the benefit of hindsight.

German manufacturer Nordex this week surprised us by revealing a €785m takeover of the wind arm of Spain’s Acciona. And, if conversations at this week’s RenewableUK conference are anything to go by, the announcement was a surprise to top people in the firms too.

It is not the idea of consolidation among manufacturers that surprises us. Indeed, we said in our 2015 predictions that it would be a big trend this year as firms pool resources in the face of a tough economic climate. We have already seen major deals in the last couple of years from GE and Alstom; Areva and Gamesa; and Mitsubishi Heavy Industries and Vestas.

No, what surprises us is the speed with which this deal seems to have been done. It is rare for such a deal to pass unnoticed through senior management, but this one has. We have a couple of ideas of why that might be but, first, let’s go over the details of the deal.

Nordex has said it would pay €366m in cash to Acciona for the arm, and make up the rest of the transaction cost through the issue to Acciona of Nordex shares worth €419m. The takeover is set to give Acciona a 29.9% stake in the German company.

The deal is subject to approval from competition authorities and is due to complete in the first half of next year. We do not anticipate any competition concerns as there are few markets in which Nordex and Acciona compete head-to-head.

Nordex is active in around 20 countries, but its main interests are in Europe where it has a 10% market share. Globally, however, it has a 3% market share with disparate operations in the likes of South Africa, Turkey and Uruguay.

Meanwhile, Acciona has factories in Brazil, Spain and the US, and is also opening in India. The company has been forced to expand globally after retrospective changes to wind farm subsidies in Spain, which pushed it to a €2bn loss in 2013. This expansion has so far been successful and appears to have put the company on a more stable financial footing.

And it is this focus on stability that may hold the key to this deal.

Nordex has also been through four years where stable growth has been the order of the day. It reported operating losses in 2011 and 2012, but has now grown to an operating profit of €78m in 2014 on sales of €1.7bn. This means that sales and operating profits are almost double where they were in 2010, which shows solid growth but nothing spectacular.

Now Nordex wants more and this deal with Acciona shows that it is looking to put its foot more firmly on the accelerator.

There will not be fast growth in Nordex’s core European markets in the next five years, so the tie-up with Acciona bolsters its overseas operations. Remember, Acciona brought in US private equity firm KKR to invest in its global arm last October, so growth is definitely in its sights. Meanwhile, in Nordex, it looks like Acciona regains a stable base in Europe.

And yet, we still wonder about the speed of the deal. Why so fast?

For that, we have three theories. First, it was not actually a quickly-put-together deal at all. Both management teams are just very good at keeping secrets.

Second, it was a quick deal but the firms are very entrepreneurial and so were able to respond speedily to a deal that is in their mutual interests.

Or third, the pair of them were desperate to achieve their business aims and they jumped at this deal quickly because they thought it was the only one in town.

At this stage it is impossible to be completely sure. We know that Nordex and Acciona are both well-run, and so either the first or second option is most likely. However, if the third is right and they jumped in too quickly then doubtless we will see the cracks emerge over the next couple of years. As with most deals, we will only be able to tell if it worked out with the benefit of hindsight.

German manufacturer Nordex this week surprised us by revealing a €785m takeover of the wind arm of Spain’s Acciona. And, if conversations at this week’s RenewableUK conference are anything to go by, the announcement was a surprise to top people in the firms too.

It is not the idea of consolidation among manufacturers that surprises us. Indeed, we said in our 2015 predictions that it would be a big trend this year as firms pool resources in the face of a tough economic climate. We have already seen major deals in the last couple of years from GE and Alstom; Areva and Gamesa; and Mitsubishi Heavy Industries and Vestas.

No, what surprises us is the speed with which this deal seems to have been done. It is rare for such a deal to pass unnoticed through senior management, but this one has. We have a couple of ideas of why that might be but, first, let’s go over the details of the deal.

Nordex has said it would pay €366m in cash to Acciona for the arm, and make up the rest of the transaction cost through the issue to Acciona of Nordex shares worth €419m. The takeover is set to give Acciona a 29.9% stake in the German company.

The deal is subject to approval from competition authorities and is due to complete in the first half of next year. We do not anticipate any competition concerns as there are few markets in which Nordex and Acciona compete head-to-head.

Nordex is active in around 20 countries, but its main interests are in Europe where it has a 10% market share. Globally, however, it has a 3% market share with disparate operations in the likes of South Africa, Turkey and Uruguay.

Meanwhile, Acciona has factories in Brazil, Spain and the US, and is also opening in India. The company has been forced to expand globally after retrospective changes to wind farm subsidies in Spain, which pushed it to a €2bn loss in 2013. This expansion has so far been successful and appears to have put the company on a more stable financial footing.

And it is this focus on stability that may hold the key to this deal.

Nordex has also been through four years where stable growth has been the order of the day. It reported operating losses in 2011 and 2012, but has now grown to an operating profit of €78m in 2014 on sales of €1.7bn. This means that sales and operating profits are almost double where they were in 2010, which shows solid growth but nothing spectacular.

Now Nordex wants more and this deal with Acciona shows that it is looking to put its foot more firmly on the accelerator.

There will not be fast growth in Nordex’s core European markets in the next five years, so the tie-up with Acciona bolsters its overseas operations. Remember, Acciona brought in US private equity firm KKR to invest in its global arm last October, so growth is definitely in its sights. Meanwhile, in Nordex, it looks like Acciona regains a stable base in Europe.

And yet, we still wonder about the speed of the deal. Why so fast?

For that, we have three theories. First, it was not actually a quickly-put-together deal at all. Both management teams are just very good at keeping secrets.

Second, it was a quick deal but the firms are very entrepreneurial and so were able to respond speedily to a deal that is in their mutual interests.

Or third, the pair of them were desperate to achieve their business aims and they jumped at this deal quickly because they thought it was the only one in town.

At this stage it is impossible to be completely sure. We know that Nordex and Acciona are both well-run, and so either the first or second option is most likely. However, if the third is right and they jumped in too quickly then doubtless we will see the cracks emerge over the next couple of years. As with most deals, we will only be able to tell if it worked out with the benefit of hindsight.

German manufacturer Nordex this week surprised us by revealing a €785m takeover of the wind arm of Spain’s Acciona. And, if conversations at this week’s RenewableUK conference are anything to go by, the announcement was a surprise to top people in the firms too.

It is not the idea of consolidation among manufacturers that surprises us. Indeed, we said in our 2015 predictions that it would be a big trend this year as firms pool resources in the face of a tough economic climate. We have already seen major deals in the last couple of years from GE and Alstom; Areva and Gamesa; and Mitsubishi Heavy Industries and Vestas.

No, what surprises us is the speed with which this deal seems to have been done. It is rare for such a deal to pass unnoticed through senior management, but this one has. We have a couple of ideas of why that might be but, first, let’s go over the details of the deal.

Nordex has said it would pay €366m in cash to Acciona for the arm, and make up the rest of the transaction cost through the issue to Acciona of Nordex shares worth €419m. The takeover is set to give Acciona a 29.9% stake in the German company.

The deal is subject to approval from competition authorities and is due to complete in the first half of next year. We do not anticipate any competition concerns as there are few markets in which Nordex and Acciona compete head-to-head.

Nordex is active in around 20 countries, but its main interests are in Europe where it has a 10% market share. Globally, however, it has a 3% market share with disparate operations in the likes of South Africa, Turkey and Uruguay.

Meanwhile, Acciona has factories in Brazil, Spain and the US, and is also opening in India. The company has been forced to expand globally after retrospective changes to wind farm subsidies in Spain, which pushed it to a €2bn loss in 2013. This expansion has so far been successful and appears to have put the company on a more stable financial footing.

And it is this focus on stability that may hold the key to this deal.

Nordex has also been through four years where stable growth has been the order of the day. It reported operating losses in 2011 and 2012, but has now grown to an operating profit of €78m in 2014 on sales of €1.7bn. This means that sales and operating profits are almost double where they were in 2010, which shows solid growth but nothing spectacular.

Now Nordex wants more and this deal with Acciona shows that it is looking to put its foot more firmly on the accelerator.

There will not be fast growth in Nordex’s core European markets in the next five years, so the tie-up with Acciona bolsters its overseas operations. Remember, Acciona brought in US private equity firm KKR to invest in its global arm last October, so growth is definitely in its sights. Meanwhile, in Nordex, it looks like Acciona regains a stable base in Europe.

And yet, we still wonder about the speed of the deal. Why so fast?

For that, we have three theories. First, it was not actually a quickly-put-together deal at all. Both management teams are just very good at keeping secrets.

Second, it was a quick deal but the firms are very entrepreneurial and so were able to respond speedily to a deal that is in their mutual interests.

Or third, the pair of them were desperate to achieve their business aims and they jumped at this deal quickly because they thought it was the only one in town.

At this stage it is impossible to be completely sure. We know that Nordex and Acciona are both well-run, and so either the first or second option is most likely. However, if the third is right and they jumped in too quickly then doubtless we will see the cracks emerge over the next couple of years. As with most deals, we will only be able to tell if it worked out with the benefit of hindsight.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.