(Corrects paragraph 10 to say Vestas expects EBIT margin at offshore division at 4% this year (not until 2025), after the company corrected its earlier comment)
COPENHAGEN, Oct 29 (Reuters) - Wind turbine maker Vestas said on Thursday it would accelerate growth in offshore wind after announcing a $838 million deal to take full ownership of its joint venture with Mitsubishi Heavy Industries’.
The acquisition, which prompted Vestas shares to jump more than 6%, comes at a time when offshore wind is receiving increasing attention from governments around the world seeking to lower emissions and meet climate-change targets.
The 50-50 joint venture, MHI Vestas, was formed in 2014 and supplies wind turbines to developers of offshore farms. Vestas expects it to generate revenues of 1.4 billion euros ($1.65 billion) this year.
Under the all-share deal announced on Thursday, the Danish company will buy Mitsubishi’s 50% share for 709 million euros ($838 million) by issuing new Vestas shares and transferring 2.5% of the new equity to Mitsubishi. The Japanese company will also receive a seat on the Vestas board.
“Offshore wind is growing rapidly, so this is a market we have to participate more actively in,” Vestas Chief Executive Henrik Andersen said in an interview.
The company will soon launch a new, larger offshore platform to step up competition with rivals Siemens Gamesa and General Electric.
“Given that we expect the offshore market to grow faster than onshore through 2030, this will give the consolidated Vestas business a faster growth profile,” Citi analysts said in a note.
Currently, offshore wind accounts for less than 5% of total installed wind capacity globally.
Oil majors such as BP, Total and Shell have recently snapped up offshore wind assets as a way to achieve scale to meet lofty renewable targets and reach their climate goals. Vestas expects an EBIT (earnings before interest and taxes) margin at the offshore division of around 4% this year, below the expected 5-7% for Vestas’ onshore business. Vestas said it doesn’t expect the acquisition to negatively impact its EBIT margin in any significant way in the next 4-5 years, and that the company will see synergies between onshore and offshore in the longer term.
Shares in Vestas, the world’s largest wind turbine maker, were trading up 6.4% at 1021 GMT.
$1 = 0.8461 euros Reporting by Jacob Gronholt-Pedersen; editing by Jason Neely and Pravin Char
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