Siemens Considers Buying Iberdrola’s Siemens Gamesa Stake
Siemens Considers Buying Iberdrola’s Siemens Gamesa Stake
(Bloomberg) -- Siemens AG is considering buying Iberdrola SA’s 8% stake in Spanish wind-turbine maker Siemens Gamesa Renewable Energy SA to bolster its energy holdings, according to people familiar with the matter.
Siemens could pay a premium to the current value of about 720 million-euros ($793 million), bringing its holding to about 67%, said two of the people who asked not to be identified because the matter is private.
An eventual move to acquire the rest of the outstanding shares in Siemens Gamesa is possible at a later date, the people said. No decision has been made and there’s no certainty the deliberations will lead to a transaction, they said.
Representatives of Siemens, Iberdrola and Siemens Gamesa declined to comment.
Siemens Gamesa shares rose 8.5%, the most in almost 10 months, while Siemens closed 1.4% higher and Iberdrola gained 0.3%.
A move by Siemens to strengthen its hold over its energy businesses would come in preparation of a planned spinoff next year of its struggling power and gas unit -- dubbed Siemens Energy -- which will hold a 59% stake in Siemens Gamesa. The acquisition of all of Siemens Gamesa would remove a layer of complexity in the operation and the structure of the future listed company.
Siemens’s Chief Executive Officer Joe Kaeser said in an interview earlier this month that he aims to shed about 75% of the energy division over time. The power and gas unit is Siemens largest by revenue but has the lowest profit margin. It has struggled for years with a slump in global orders for thermal power plants.
Kaeser has spun off a series of activities in recent years including renewable energy and health care. In 2016, Siemens and former rival Gamesa Corp Technologica SA struck a deal that saw the German company injecting its wind turbine operations into the Spanish counterpart in exchange for a stake.
At the time, the Spanish securities regulator exempted Siemens from making a mandatory offer to Gamesa’s other shareholders. Iberdrola said its shareholder agreement with Siemens initially gave it the right to name two directors to the board. It currently has one.
The tie-up hasn’t always been smooth, with synergies falling short of what has been needed to offset lower turbine prices, increased competition and a dip in demand. Frictions were laid bare late 2017, when Iberdrola’s Chairman Ignacio Galan said “we can’t be happy with a company whose value has declined by more than 50% in six months.”
What Bloomberg Intelligence Says
A purchase by Siemens of the Iberdrola stake “could simplify any spinoff of Siemens Energy. The interest indicates enduring underlying wind-business support, despite weaker-than-expected 2020 Siemens Gamesa sales goals.”
--James Evans, clean energy analyst
Siemens has said the planned spinoff would be a “powerful pure play” in energy and electricity. The power and gas division has operations spanning oil and gas as well as conventional generation and transmission, while Siemens Gamesa develops wind farms and makes renewable energy equipment.
--With assistance from Charles Penty.
To contact the reporters on this story: Eyk Henning in Frankfurt at ehenning1@bloomberg.net;Oliver Sachgau in Munich at osachgau@bloomberg.net;Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net
To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net, Tara Patel, Ben Scent
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