We believe M&A ‘risk’ is increasing in the wind turbine industry, with the need for consolidation, depressed valuations and still attractive medium-term prospects. We think possible acquirers could either be (i) Asian turbine manufacturers or (ii) large industrial players. In our coverage, we highlight Nordex (good products and track record but lacks scale) and Vestas (leadership, large client and product portfolios, lacking a solid management team and larger balance sheet for offshore activities) as the most interesting targets.
- Key areas of M&A are in our view (i) further consolidation to reduce over-capacity; (ii) the acquisition of offshore capability broadly; or (iii) possible sector entry.
- Two obvious potential acquirers: We see two types of possible acquirers seeking entering the wind turbine market: (i) Asian manufacturers (e.g. Samsung, Hyundai HI, Sinovel or Goldwind) in order to acquire platforms readily bankable in Western markets; (ii) large conglomerates/Capital Goods companies seeking exposure to the attractive growth of the wind sector.
- Vestas and Nordex are the most likely targets: We rate Nordex and Vestas the most likely acquisition targets, with no existing anti-takeover measure and management/board openness (officially for Nordex and rumoured for Vestas). We see Gamesa’s product and client portfolios as the less attractive from a buyer’s point of view; in addition, the receptiveness of Iberdrola - which owns 20% of Gamesa - to potential takeover is unclear.