Siemens Energy filed a 4.05 billion euro ($4.28 billion) bid on Saturday for the remaining shares in Siemens Gamesa, the faltering wind turbine subsidiary, in the hopes of removing a complicated ownership structure that has dragged on its stock.
The 18.05 euros per share bid represents a 27.7% premium over Siemens Gamesa’s last unaltered closing share price of 14.13 euros on May 17. It’s a 7.8% increase over Friday’s closing price.
Siemens Energy has been under increasing pressure from shareholders to acquire control of Siemens Gamesa, which it owns a 67 percent stake in as part of a spin-off from erstwhile parent Siemens.
Siemens Energy has had limited influence over Siemens Gamesa’s product delays and operational issues as a result of this investment. In less than a year, the company has issued three profit warnings.
“It’s vital that the deteriorating situation at SGRE be stopped as soon as possible, and that the value-creating repositioning begin as soon as feasible,” said Joe Kaeser, chairman of Siemens Energy’s supervisory board.
Sources told Reuters earlier this year that Siemens Energy was looking at buying the remaining interest in Siemens Gamesa, and that a deal may be completed by the summer.
Siemens Energy said it expects to fund the deal with equity or equity-like instruments up to 2.5 billion euros, with a capital raise without subscription rights as a first stage.
Siemens Energy stated the remaining funds would be raised through debt and cash on hand, with the goal of delisting Siemens Gamesa. Once 75 percent ownership is attained, Spanish stock market regulations enable it.
Siemens Energy’s structure will be simplified, and a more cohesive business model will be developed that caters to legacy energy assets such as coal, transition technologies such as gas, and renewable energy sources.
“This deal takes place at a time when global energy is undergoing significant changes,” Siemens Energy Chief Executive Christian Bruch said. “We are certain that the present geopolitical circumstances will not derail the energy transition.”
The deal, according to Siemens Energy, will result in cost benefits of up to 300 million euros per year after three years of full integration, owing to better supply chain management, merged administration, and shared R&D.
The purchase is planned to finalize in the second part of this year, with revenue synergies in the mid-teens million range by 2030, according to the company.
($1 = 0.9470 euros)