Gamesa, Siemens to Combine Wind-Turbine Businesses-- 3rd Update
June 17 2016 - 11:31AM
Dow Jones News
By Christopher Alessi and Carlos Lopez-Perea
FRANKFURT--German industrial conglomerate Siemens AG and Spain's
Gamesa Corporación Tecnológica SA have agreed to merge their wind
power operations in a binding deal that would create one of the
world's largest wind- turbine makers.
The companies said on Friday, Siemens would take a majority
stake of 59% in the planned combined entity, while Gamesa's
existing shareholders would hold a 41% stake. As part of the deal,
Siemens would also provide Gamesa shareholders with a cash payment
of EUR3.75 a share, to be distributed directly following the
completion of the merger, according to the companies.
Gamesa's largest shareholder, Iberdrola, which holds a 20%
stake, supports the deal, Gamesa said. Iberdrola would own an 8.1%
stake in the future company.
The new joint venture, which would maintain its global
headquarters and public listing in Spain, would have revenue of
EUR9.3 billion ($10.45 billion) and adjusted earnings before
interest and taxes of EUR839 million, Siemens said.
"This is the best possible combination that creates value for
customers, shareholders and, of course, employees," Siemens Chief
Executive Joe Kaeser said of the deal structure on a conference
call with reporters Friday.
Gamesa Chief Executive Ignacio Martin said Friday, in a
conference call with reporters, that the transaction makes "big
strategic and financial sense.
The companies said they expect synergies on annual
EBIT--earnings before interest and taxes--of EUR230 million in the
fourth year after the closing of the deal.
Mr. Martin called that target "cautious and perfectly
achievable."
Siemens and Gamesa had, in February, agreed in principle to
combine their wind businesses but the tie-up was delayed because
the Spanish company needed to renegotiate part of an offshore wind
joint venture, known as Adwen, with French nuclear-engineering
company Areva SA.
The Wall Street Journal on Wednesday reported that the issues
surrounding Adwen had been in resolved in principle, according to
people familiar with the matter, and that Siemens and Gamesa were
close to announcing the long-anticipated deal.
Gamesa and Areva have agreed that Areva would waive existing
contractual restrictions in Adwen to simplify the Siemens-Gamesa
tie-up, the companies said. Gamesa also granted Areva a put option
for the latter's 50% stake in Adwen and a call option for Gamesa's
50% stake in that joint venture. Both of those options expire in
three months, according to Siemens and Gamesa.
Areva on Wednesday separately announced plans to split the
state-controlled nuclear-engineering group in three, as part of a
comprehensive restructuring plan that would see the company sell
its renewable energy assets overtime.
General Electric Co. said the U.S. industrial company is also
involved in discussions over the future of Adwen but there are "no
definitive plans at this point."
The Siemens-Gamesa merger would create a new global market
leader in wind energy by capacity, surpassing China's Xinjiang
Goldwind Science & Technology Co., Denmark's Vestas Wind
Systems A/S and General Electric Co., according to FTI
Consulting.
Siemens and Gamesa said their respective wind businesses were
highly complementary.
Siemens's wind division, which had almost EUR6 billion in
revenue in 2015, manufactures and installs wind turbines for on-
and offshore farms. But the business has been largely focused on
the offshore market--where it has an ample order backlog for
turbines--while missing onshore growth opportunities, analysts
say.
Mr. Kaeser said that the deal would give Siemens access to
offshore markets in emerging economies in Asia and Latin America,
where Gamesa currently has a strong presence.
Siemens' supervisory board and Gamesa's board of directors both
approved the deal, the companies said. But the deal is still
subject to approval by Gamesa shareholders.
Monica Houston-Waesch and Eyk Henning also contributed to this
article.
Write to Christopher Alessi at christopher.alessi@wsj.com and
Carlos Lopez-Perea at carlos.perea@wsj.com
(END) Dow Jones Newswires
June 17, 2016 11:16 ET (15:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Siemens Gamesa Renewable... (PK) (USOTC:GCTAY)
Historical Stock Chart
From Jul 2024 to Aug 2024
Siemens Gamesa Renewable... (PK) (USOTC:GCTAY)
Historical Stock Chart
From Aug 2023 to Aug 2024