Siemens Is in Talks With Spain's Gamesa on Link-Up in Wind Energy -- Update
January 29 2016 - 2:44PM
Dow Jones News
By Eyk Henning
FRANKFURT--Spain's Gamesa Corporacion Tecnologica SA confirmed
it is in talks about combining wind-energy activities with Siemens
AG, a tie-up that would create the world's largest wind turbine
manufacturer.
Gamesa and Siemens are in talks on "a potential integration of
certain wind energy businesses," Gamesa said in a regulatory filing
Friday, but an agreement hasn't been reached.
People familiar with the matter told The Wall Street Journal
earlier on Friday that the companies were in talks. Siemens had no
immediate comment.
The companies late last year agreed in principle to a potential
combination of their wind turbine activities, these people said,
but it was unclear what structure the combination would have. If
Siemens were to acquire Gamesa, the deal would cost the German
company around EUR4.6 billion ($5 billion), business advisory firm
FTI Intelligence estimated. Any deal would have to be agreed to by
Spanish utility Iberdrola SA, Gamesa's largest shareholder with a
20% stake.
The wind turbine industry has faced a recent wave of
consolidation. In 2015, Germany's Nordex SE acquired the renewable
energy arm of Spain's Acciona SA in a EUR785 million deal. As part
of that, Acciona now holds a 29.9% stake in Nordex.
"Making a move for Gamesa now will propel Siemens to the top of
the global turbine market," FTI said, and bolster the company
against growing competition. The combination would create the top
wind turbine maker by sales and market share.
"Siemens and Gamesa together would have around 15% of the global
wind market on current market shares, easily outstripping market
leader Vestas SA and General Electric Co.," FTI said.
Siemens's wind and renewables unit had revenue of EUR5.66
billion in the fiscal year that ended in September. Siemens overall
revenue was EUR75.6 billion. Gamesa posted revenue of EUR2.5
billion in the first nine months of last year and forecast
full-year sales of up to EUR3.4 billion.
An acquisition would also give Siemens exposure to emerging
markets where Gamesa has more of a foothold.
Still, an acquisition could face obstacles at a time when
Siemens shareholders are pushing the company to improve
profitability.
"Siemens shareholders may be skeptical about paying around
EUR4.6 billion upfront to grow a business segment [that] has been
perceived to be underperforming on margins compared to its other
divisions," FTI said.
A deal with Gamesa would mark Siemens's second large transaction
in January. The Munich-based company earlier this week agreed to
buy U.S. simulation software supplier CD-adapco for around $970
million.
Since taking the helm in July 2013, Siemens Chief Executive Joe
Kaeser has worked on expanding the already-dominant energy business
through acquisitions. In 2014, Siemens agreed to buy U.S.
oil-equipment maker Dresser-Rand group Inc. for $7.6 billion
including debt.
Investment banks Goldman Sachs Inc. and Morgan Stanley are
advising on the potential transaction, people familiar with the
matter said.
Jeanette Neumann and Ana Garcia contributed to this article.
Write to Eyk Henning at eyk.henning@wsj.com
(END) Dow Jones Newswires
January 29, 2016 14:29 ET (19:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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