Siemens ups stake to 67.1% to spin-off SGRE into Siemens Energy for the scale to win in wind

Siemens has bought out Iberdrola’s 8.1% stake in Siemens Gamesa Renewable Energy (SGRE) for a total cost of €1.1bn ($1.2bn), potentially ending a period of acrimony between the two companies and bringing a major customer back into SGRE’s fold. This price is equivalent to €20/share – a 32% premium on top of SGRE’s average share price for the last 30 trading days.

Gamesa will now own a 32.9% stake in SGRE, with Siemens holding the majority 67.1% stake in the company. In addition, Iberdrola, as a customer of Siemens Gamesa and Siemens, signed a cooperation agreement which will grant exclusive negotiation rights for a limited period of time, for certain wind power projects and for improving the distribution grid. Siemens expects that additional annual savings of up to €900m in net present can be realised for SGRE through intensified cooperation between Siemens and SGRE and an additional €100m annual savings by ‘unwinding the shareholder agreement’.

The divestment is part of the company’s asset rotation strategy. Siemens will transfer its majority stake in SGRE to its gas and power business, Siemens Energy, as part of its planned spin-off and subsequent public listing. The pure-play energy business aims to be the ‘go to institution for combating climate change’ with the scale to win in wind.

Bhavana Sri Pullagura, Power Analyst at GlobalData, commented: “Siemens targets to co-fire its gas turbines with 20% hydrogen in 2020 and 100% hydrogen by 2030; and its commitment towards the Paris climate targets is being hit by plunging demand as the global power sector looks to decarbonise its operations. In this connection, a robust, profitable and innovative business is a key prerequisite for success. Siemens Energy will have the scale needed to succeed in terms of innovation, resources and geographical reach in key renewables markets such as the wind power sector which will help to shape the energy transition.”

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