Siemens Energy will offer 4.04 billion euros ($4.27 billion) to buy the shares in Siemens Gamesa Renewable Energy it doesn’t already own, a long-awaited step in its efforts to turn around the troubled Spanish wind-turbine maker.
Siemens Energy has offered 18.05 euros per Siemens Gamesa share to fully acquire the company, it said on Saturday. Siemens Energy already owns 67% of the firm, which currently has a market value of 11.4 billion euros ($12 billion), according to data compiled by Bloomberg News.
Gamesa’s shares surged more than 18% since Bloomberg reported Wednesday that Siemens Energy was weighing a full takeover with a view to delist the firm — a plan the company later confirmed. Siemens Energy expects the transaction to be completed in the second half of this year.
“Despite the stock now reflecting a high probability of a takeover, the offer price still represents an upside of 7.8% on Friday’s close and we expect the stock to trade-up on Monday to reflect this,” Deepa Venkateswaran, a Bernstein analyst, said in a note.
Speculation about a full takeover has been swirling for months. Project delays and cost overruns have mounted at Siemens Gamesa, triggering several profit warnings and a suspension of its guidance as its operations bled cash. The issues have eroded investor trust and raised the prospect that Siemens Energy might tighten its grip on the unit to address the problems.
“It is critical that the deteriorating situation at Gamesa is being stopped as soon as possible, and the value-creating repositioning starts quickly,” said Siemens Energy chairman Joe Kaeser
Siemens Energy said it expects to achieve around 300 million euros annually in synergies within three years of integrating Gamesa into its business. Those savings are seen through lower combined supply chain and logistics costs and savings on research and development and administration expenses.
Siemens Energy’s bid represents only a small premium over Friday’s closing price of 16.745 euro per Siemens Gamesa share. In line with market rules, it’s above the target’s weighted three-month average share price, which is around 16.50 euros. Even with Friday’s jump, Siemens Gamesa shares are down more than 20% in 2022 and more than 35% in the past year.
Turbine makers are facing rising costs for energy, steel and copper as well as supply-chain disruptions that are squeezing profits. The core of Siemens Gamesa’s problems is in its onshore division, where the company has been facing difficulties scaling up its new turbine model, dubbed the 5.X platform.