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Bert Nordberg has refused takeover attempts and will do so again: Vestas must remain Danish

Insight: Vestas' share price has declined significantly since October, making the company an attractive acquisition candidate. But chairman Bert Nordberg will fight tooth and nail to keep the company Danish.

Bert Nordberg, bestyrelsesformand for Vestas.

Vestas chairman Bert Nordberg grimaces when talking about foreign banks, the ones which would have pushed Vestas to the brink of bankruptcy when he took over the chair post in the company five years ago.

Help came from a few Nordic banks. Banks, to whom Nordberg has sworn eternal loyalty. The chairman has also promised that Vestas will never be anything other than a Danish company.

Nordberg took up the battle with foreign banks when Vestas hanging by the skin of its teeth, financially. He is also prepared to challenge any foreign player contemplating a takeover attempt of the now healthy company, just because the share price is low.

The Swedish chairman says that he blocked an acquisition offer for the company, and that if necessary, he is prepared to do it again.

"I have promised that Vestas must remain a Danish company on the Danish share market. Being a Danish company out in the big world is like a stamp of quality. Some have tried to buy us before, and I stopped them. I will do that again," says Nordberg.

But can you protect yourself against a foreign takeover?

"Yes, there are ways you can protect yourself [against this kind of thing, -ed.]."

But there have been recent attempts to buy Vestas?

"I have no comment."

25 percent price decline

Analysts say it is not unlikely that there will be an acquisition-hungry player with its sights set on Vestas.

The company's share price declined 25 percent since October, where Vestas announced an accelerating price squeeze and the impending tax reform in the US has created uncertainty on the company's most important market.

The significant price decline combined with the fact that Vestas has more than DKK 20 billion (EUR 2.69 billion) in its coffers has prompted many to speculate on whether Vestas could be an obvious choice for industrial actors, for example.

Besides a comparatively low valuation compared to industrial conglomerates, for instance, the cash portfolio can help a buyer finance the acquistion.

However Nordberg intends to stop all impending offers.

"We are debt-free, we have a lot of cash, and it proves how attractive we really are. But I will do what I can to stop it [Vestas being sold - ed.]," he says.

In the summer, investment bank Goldman Sachs produced an analysis which Finans has accessed, which suggested that a potential buyer would be able to buy Vestas at an attractive price.

Uncertainty has increased

According to Goldman Sachs, at the time Vestas was traded at 6.7 times the expected EBITDA in 2017, while potential buyers usually trade at kist double – even with the prospect of a lower growth rate than Vestas.

Since then, there has been much uncertainty around Vestas' earnings and growth in the coming years, while the price has also plummetted.

Casper Blom, Vestas analyst at Norwegian investment bank ABG Sundal Collier, finds it difficult to see a more obvious owner of Vestas than the current status quo.

"The question is whether a buyer can take over the company and create more worth than Vestas can. I don't think that is highly likely," he says.

According to an analysis from Danish bank Jyske Bank, Vestas' price today "reflects the worst imaginable scenario."

The bank notes that there remains huge uncertainty surrounding US tax reform and the impacts of the price war on earnings.

But the bank says the price decline is "aggressive," in light of Vestas' large cash holdings and its stable service business with an order book valued at more than DKK 75 billion (EUR 10 billion). According to the bank the value of these two elements make up 70 percent of Vestas' total price.

Wants an industry-oriented shareholder

Nordberg believes that the stock market is a prudent one.

"The stock market is not taking any risks. It is based on a worst case scenario. You can say there is a crisis in the stock price, but not in the company. Our job as board is to run the company well," says the chairman.

He has previously complained that there are no major shareholders in Vestas with an industrial background, as is the case in many Swedish companies, This would secure the future of the company and offer important input to the board.

"It would not be bad for Vestas to have an industry-oriented owner with approximately 15 percent of the shares. That would give this investor strong influence, but also give the board another possibility for discussion," he said to Finans last year.

Since then, the company delivered its first impairment under CEO Anders Runevad due to the price squeeze and uncertainty in the US.

However, the chairman does not believe Vestas can do much else.

"The company is performing well. In fact, better than ever. External factors are impacting the price now. Our fate is in the hands of a discussion between republicans and democrats in the US, where they don't like that the largest wind energy supplier is Danish," says Nordberg.

The Swedish chairman argues that Vestas' competitors are desperate and willing to lose money, which impacts prices on new turbines and earnings.

According to Blom from ABG Sundal Collier, Nordberg has a point:

"They earn money and still get many orders. The problem is just that they might not earn as much as before. They are global leaders, but if the industry changes, they're not isolated from what happens around them."

English Edit: Lena Rutkowski

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