Vestas Falls as Mitsubishi Plans Signal No Joint Venture

Vestas Wind Systems A/S (VWS) shares fell the most in 10 days after Mitsubishi Heavy Industries Ltd. (7011) announced offshore wind turbine plans that suggest a deal between the two companies isn’t imminent.

Mitsubishi Heavy said today it began testing a generation system using an hydraulic drive train instead of mechanical gears. The Tokyo-based company said in a statement that it will now accelerate development of a 7-megawatt offshore wind turbine, with mass-production planned to start in 2015.

Mitsubishi’s announcement signaled it’s not close to a deal with Vestas to jointly develop the 8-megawatt V-164 offshore turbine being worked on by the company based in Aarhus, Denmark. The two companies announced talks about a “strategic cooperation” in August. Vestas tumbled as much as 4.9 percent and was trading down 4 percent at 37.59 kroner at 11:45 a.m. in Copenhagen.

“The bargaining power is definitely shifting to Mitsubishi with this announcement,” Jacob Pedersen, an analyst at Sydbank A/S (SYDB) in Aabenraa, Denmark, said in a telephone interview. “I conclude that an agreement with Vestas will not happen within the next three months.”

Matthew Whitby, a spokesman for Vestas, said, “The talks with Mitsubishi Heavy are still on-going, and we can’t say anything beyond what’s in previous company announcements.”

Pedersen said that while he’s confident Vestas’s machine will be “a lot better product,” and it makes sense for both companies to carry on developing their own new turbines in the absence of a deal, “you can do that quietly or can you can do that making a lot of noise. It sends a message to Vestas: ‘Do you really think that we need you?’”

Mitsubishi Heavy said it plans to install and test its new technology at Hunterston in south-west Scotland this year. It will have a trial of a floating turbine scheduled for Fukushima, Japan in August 2014. It aims for at least a 10 percent share of the global offshore wind power market by 2017, a company official, Masahide Umaya, said today in Tokyo.

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net