According to reports, French transport and power engineering company Alstom (ALSO.PA) moved to quash speculation that it was eyeing offshore wind power takeovers on Thursday, saying it would not pursue deals that would harm shareholders.
Chief Executive Patrick Kron reiterated the company’s strategy of developing its own offshore products as it seeks to gain a foothold in the fast-expanding sector as part of a consortium bidding to build France’s first offshore wind farms.
“I just want to remind you that in the current share price environment I repeatedly stated that I will not harm our shareholders with adventurous deals that would imply raising equity in unfavorable conditions,” he told an investor meeting.
Alstom shares are down 15 percent over the last year, underperforming the French benchmark CAC40 index .FCHI, down 5 percent over the same period.
Kron declined to confirm or deny speculation Alstom was seeking targets to expand its wind power business following press reports it was looking at wind turbine makers Gamesa (GAM.MC) of Spain, Vestas (VWS.CO) of Denmark and Germany’s REpower.
“Let’s be clear there is nothing more to report on REpower, on Vestas, on Gamesa, Nordex (NDXG.DE) and a number of others,” Kron said.
“I’m not surprised that we are mentioned as I repeatedly have said we will evaluate our strategy in wind and in renewable in general … But I have no intention to comment every time there is a rumor on this or that.”
A Paris-based trader said that even without an outright denial, the CEO’s comments have weakened the perception that the group is interested in REpower.
Bernstein analyst Martin Prozesky said Alstom has wanted to make it clear to investors it would not raise capital to pursue reckless deals.
“Alstom clearly wants wind exposure and is likely to get French offshore orders, but they are developing their own technology and can build a plant for 200-300 million euros,” he said. ” no need to go and spend 1.5 billion.”
According to a report in FT Deutschland on Wednesday, REpower could fetch 1.5 billion euros, prompting concerns of a potential rights issue by Alstom in case of a deal.
The chairman of Vestas also dismissed takeover rumors on Thursday, saying he was not aware of any interest on the part of Alstom in acquiring it.
Senior analyst Jacob Pedersen at Danish bank Sydbank said he thought the likelihood of Alstom or other companies acquiring Vestas was very low, noting the stock has been cheap for a long time.
“If Vestas was going to be taken over, it would have happened already,” Pedersen said.
“On the other hand one should never say never because this is a sector where consolidation is under way.”
Wind turbine makers, like several other renewable energy equipment manufacturers, are trading at very low valuations, fuelling speculation they could become takeover targets.
Vestas trades at a price-to-book ratio of around 0.6, Suzlon (SUZL.NS) 0.78 and Gamesa 0.37, while Alstom trades at a ratio of 2.4.
Vestas’ shares lost two thirds of their value last year, as the company struggled in a difficult market, taking the company’s market capitalization down to just $2.2 billion at the end of 2011.
Vestas shares have remained weak in 2012, hit by two profit-warnings in just over three months, in late October and again in early January, but the stock traded up nearly 6 percent on Thursday on the back of the Alstom news.
Shares in Alstom, which on Wednesday dropped 4 percent following the report the company was eyeing REpower, were trading up 1.65 percent at 32.08 euros at 1327 GMT, outperforming a flat CAC 40 index .FCHI, up 0.08 percent.
Alstom is developing its first offshore wind turbine, Haliade, which with a diameter of 153 metres – roughly half the height of the Eiffel tower – will be the world’s largest once it is launched in 2014.