Siemens Energy is planning a bid for the shares of Siemens Gamesa Renewable Energy it doesn’t already own, a long-speculated step in its efforts to turn around the troubled Spanish wind-turbine maker, people familiar with the matter said.
Siemens Energy is preparing to make an all-cash offer in the next week with a view to delisting the firm, the people said, asking not to be identified because the information is private. It already owns 67% of Siemens Gamesa, which currently has a market value of 9.6 billion euros ($10.1 billion), according to data compiled by Bloomberg.
Speculation about a full takeover has been swirling for months as project delays and cost overruns mount at Siemens Gamesa, triggering several profit warnings and a suspension of its guidance as the operations are bleeding cash.
The issues are so dramatic that they have eroded investor trust and raised the prospect that Siemens Energy might tighten its grip on the unit to address the problems.
Any offer is likely to represent only a small premium, the people said. In line with market rules, it would have to be above the target’s weighted three-month average share price, which is around 16.50 euros. The average analyst target price for Siemens Gamesa is slightly above 18 euros per share, according to data compiled by Bloomberg. The consensus includes several higher estimates set before the most recent profit warning, however.
The shares have lost 33% this year, even after a sudden surge in late Tuesday trading.
No final decisions on price or timing have been made, and the company could still opt against making an offer, the people said.
Siemens Energy later released a statement which said: “In light of recent media reports Siemens Energy AG confirms that management is considering a cash tender offer for all outstanding shares in Siemens Gamesa Renewable Energy with the intention to delist. The outcome of this consideration is open.”
“No decision has been made and there is no certainty that a transaction will materialize.”
Restructuring veteran Jochen Eickholt took over as Siemens Gamesa’s new chief executive officer in March, replacing Andreas Nauen, who was on the job for less than two years.
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.
Earlier this month, Siemens Gamesa reported another quarterly loss and said it’s keeping its full-year guidance under review. Its net loss widened to 377 million euros in the fiscal second quarter.
“Though its losses may narrow in the coming quarters, a full turnaround is unlikely in the near term due to supply-chain headwinds and elevated steel prices,” Bloomberg Intelligence analysts said in a note earlier this month.
Siemens, the European industrials giant, still owns a sizable stake in Siemens Energy after listing the unit in 2020.
Updated at 09:45 to include Siemens’ statement.
