Siemens AG to acquire 18% in Siemens India for €2.1 billion

• Siemens AG intends to acquire an 18% stake in Siemens India from Siemens Energy for €2.1 billion in cash.
• This move will push up Siemens AG’s stake in Siemens India, and reduce that of Siemens Energy.
• As part of the spin-off in 2020, Siemens and Siemens Energy did not separate their businesses in India.
• They now intend to propose a demerger of the energy business of the India business.
  

Siemens AG intends to acquire an 18% stake in Siemens India from Siemens Energy for €2.1 billion in cash, the latter informed the stock exchanges on Wednesday.

If the share purchase agreement is executed, Siemens’ stake in Siemens India will rise from 51% to 69%. At the same time, Siemens Energy’s stake would decrease from 24% to 6%.

With the intended acquisition, Siemens and Siemens Energy accelerate unbundling the business activities of the Indian subsidiary of Siemens.

“For our shareholders, the accelerated demerger of Siemens India’s energy activities will further sharpen the portfolio focus of Siemens. It also simplifies and strengthens our corporate structure in India, a fast-growing and strategically important market,” said Roland Busch, President and Chief Executive Officer of Siemens AG.

The purchase price reflects a customary discount of 15% on the 5-trading-days volume-weighted average price before the day of signing. Siemens will provide no new guarantees to Siemens Energy, the company said in a press release.

Siemens’ stock went up 2% after the announcement, as per data on BSE.

An early demerger

As part of the spin-off in 2020, Siemens and Siemens Energy did not separate their businesses in India as it was not feasible at that time. As a next step, Siemens and Siemens Energy have agreed to propose to the Board of Directors of Siemens India, a demerger of the energy business.

Siemens Energy is to ultimately acquire a controlling stake in the demerged energy business. The aim is to complete the demerger in 2025 – significantly earlier than previously planned, the company’s press release said.

Siemens has agreed with Siemens Energy to provide indirect financial measures totaling €1 one billion euro. This allows third parties to arrange guarantees for Siemens Energy. Firstly, Siemens allows Siemens Energy to use its 5% shareholding in Siemens India, worth €750 million, as collateral for guarantees. If the collateral is drawn, Siemens has committed to buy up to 5% of shares in Siemens India for €750 million.

Secondly, Siemens grants payment deferrals at market conditions in the amount of €250 million, also to be used as collateral for guarantees. These commitments enable Siemens Energy to provide appropriate collateral for the bank consortium providing a guarantee line. This line serves to secure Siemens Energy's business development and participation in the German energy transition.