Munich Siemens Energy wants to solve the problems at the loss-making wind power subsidiary Siemens Gamesa with a complete takeover. In an ad hoc report on Wednesday morning, the parent company confirmed “that the management had made a cash purchase offer […] for the outstanding shares of Siemens Gamesa […] considering.”
However, the result is open and a decision has not yet been made. According to financial circles, the group plans to take Siemens Gamesa off the Madrid Stock Exchange. The takeover bid was actually in the works two months ago. This was delayed because of the Ukraine war.
The parent company could offer investors around 16 euros per share, said a person familiar with the process. The acquisition of billions could be announced at the energy technology group’s capital market day next week. According to Spanish takeover law, the offer must be approved by the stock exchange regulator. The price must not be below the 3-month average price.
The business with renewable energies, which stands for the future of the young group, has been causing trouble for Siemens Energy for years. Again and again Gamesa surprised the parent company in Munich with profit warnings and new losses.
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The boss at Siemens Gamesa was changed several times. Since April 1st, ex-Siemens Energy board member Jochen Eickholt has been the new CEO. According to company circles, his first inventory showed that the problems are bigger than expected. Since the wind power subsidiary itself is listed on the stock exchange, the majority shareholder Siemens Energy only has indirect influence through the board of directors.
Despite the financial risks, the parent company sees a complete takeover as the best option. Siemens wants to pay for the takeover with the help of a bridge financing of more than four billion euros organized by JP Morgan and Bank of America. A capital increase is planned later. The losses at Siemens Gamesa had also pushed the parent company into the red.
Investors increase pressure on Siemens Energy
The Siemens Gamesa share closed at EUR 14.13 on Tuesday, the analysts’ target price was EUR 18 on average. Siemens Energy already holds around two thirds of the shares in Siemens Gamesa, which has a market value of 9.5 billion euros.
In the past few weeks, investors had put pressure on to solve the problem with the wind power subsidiary. “The most pressing issue is that Siemens Gamesa gets back on the fast lane,” said Ingo Speich from Deka. Vera Diehl from Union Investment was also in favor of integrating Gamesa. “Siemens Energy should definitely not part with wind power.”
Siemens Energy’s major shareholder Siemens is also dissatisfied. The Munich technology group wants to reduce its 35 percent stake to 25 percent as quickly as possible, but is hesitant because of the low share price. Siemens CFO Ralf Thomas expects that Siemens Energy boss Christian Bruch will present important measures at the Capital Markets Day on May 24: “We assume that this will be groundbreaking.”
The decision to take over the entire company is not easy. The operational problems have not been solved, according to those close to the supervisory board: “The shop has to be fixed one way or another.” Because the problems at Siemens Gamesa are not only affecting the balance sheet of Siemens Energy, but also the share price .
More: Siemens Energy falls into the red – CEO Bruch faces a big dilemma
