Siemens ups stake to 67.1% to spin-off SGRE into Siemens Energy

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Siemens has bought out Iberdrola’s 8.1 percent stake in Siemens Gamesa Renewable Energy (SGRE) for a total cost of $1.2 billion, 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 euros/share — a 32 percent premium on top of SGRE’s average share price for the last 30 trading days.

Gamesa will now own a 32.9 percent stake in SGRE, with Siemens holding the majority 67.1 percent stake in the company. In addition, Iberdrola, as a customer of Siemens Gamesa and Siemens, signed a cooperation agreement that 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 900 million euros in net present can be realized for SGRE through intensified cooperation between Siemens and SGRE and an additional 100 million euros 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.

“Siemens targets to co-fire its gas turbines with 20 percent hydrogen in 2020 and 100 percent hydrogen by 2030; and its commitment toward the Paris climate targets is being hit by plunging demand as the global power sector looks to decarbonize its operations,” said Bhavana Sri Pullagura, power analyst at GlobalData. “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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