Siemens and Spain’s Gamesa have agreed to combine their wind-turbine manufacturing businesses, creating a company with the biggest installed capacity worldwide in a move that speeds consolidation of the industry.
Siemens, Europe’s largest engineering company will own 59% of the capital of the new business, Gamesa said in a statement on its website Friday.
Gamesa, based in Zamudio, Spain, gets 41 percent and a cash payment of 3.75 euros a share ($4.22) from Siemens.
The two companies would have about 69 gigawatts of turbines installed worldwide, leading Vestas Wind Systems and General Electric.
While worldwide clean-energy installations have hit successive records in recent years, a boom in manufacturing capacity and improvements in the technology have narrowed margins for making the machines. Companies are having to compete on a global scale, with Xinjiang Goldwind of China taking the biggest market share last year.
“The combination of our wind business with Gamesa follows a clear and compelling industrial logic in an attractive growth industry, in which scale is a key to making renewable energy more cost-effective,” Siemens chief executive Joe Kaeser.
Gamesa chairman Ignacio Martin said: “We will continue to work as before, albeit as part of a stronger company and with an enhanced ability to offer all of our customers end-to-end solutions.”
The two have identified cost savings of 230 million euros that will be made as a result of the deal.
The combined company will have an order backlog of 20 billion euros, annual revenue of 9.3 billion euros and earnings before interest and taxes of 839 million euros. It will be based and listed in Spain, though the headquarters of the offshore-wind unit will be in Hamburg and Vejle, Denmark.
Each of the companies had about 5.3% of the global wind turbine market last year, according to Bloomberg New Energy Finance data. There combined 10.6 percent share would rank the new entity third behind Goldwind and Vestas.
Gamesa’s network of installed turbines is attractive to Siemens, which has been trying to expand revenue from service contracts. The German company leads in machines designed for use offshore, while Gamesa specializes in onshore wind.
Last month, Nordex SE of Germany completed the purchase of the turbine-manufacturing assets of Acciona SA, another Spanish wind company.
Vestas fired thousands of workers and closed factories to revive its profit after price pressures led to three years of losses that ended in 2014.
Siemens has a market value of almost 78 billion euros while Gamesa is currently valued at 4.8 billion euros on Thursday before the deal was announced.
The Spanish and German companies also complement each other in the markets they serve. Gamesa is strong in South America and India as well as being the biggest foreign supplier in China. Europe, the Middle East, Africa and North America meanwhile account for almost 90 percent of Siemens’s customer base, according to BNEF.