State-run power equipment manufacturer Bharat Heavy Electricals (Bhel) is planning to buy German firm AE&E Lentjes to access its high-end CFBC boiler manufacturing technology. The German company’s sales exceeded euro 70 million in 2010.
CBFC or circulating fluidised bed combustion is a combustion technology used in power plants.
Bhel has hired the services of legal and financial consultants to conduct due diligence for the proposed takeover. Bhel has cash reserves of R10,000 crore. ?We have already appointed a financial consultant to examine what are the company’s liabilities. Besides, we have hired another consultant to look into look legal aspects relating to the takeover,? a senior official in Bhel told FE, asking not to be identified.
Bhel is already manufacturing CFBC boilers, which can run even on poor-quality coal. However, it does not have technology to manufacture high-end CFBC boilers. The company is looking for technology to manufacture CFBC boilers which would run on coal with high ash content as well as poor-quality lignite. It has invited expressions of interests for technological collaboration. But now it seems that the company is veering around to the view that buying out a CFBC technology supplier would be a better option than a technological collaboration. ?We are already manufacturing CFBC boilers. But we do not have technology to make boilers which could take up high ash-content coal and low-quality lignite,? the official said. ?Taking over a company is much better than a technological tie-up,? he added.
He, however, stated his inability to give an idea about the possible deal size, saying that the company’s diligence exercise is still at an initial stage.
?Bhel?s board-level merger and acquisition committee is mandated to pursue the deal,? the official said.