Wind Energy – Bid for Shares
Siemens Energy is weighing 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.
Siemens Energy is considering to make a cash offer with a view to delisting the firm. 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.
“The outcome of this consideration is open,” Siemens Energy said in a statement. “No decision has been made and there is no certainty that a transaction will materialize.”
Siemens Gamesa jumped as much as 15%. The shares have lost about 25% this year. Siemens Energy gained as much as 5.3% in Frankfurt and was up 2.8% as of 10:48 a.m. local time.
Bleeding Cash
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, people familiar with the matter told Bloomberg. 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.
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.
It also struggled to profit on onshore wind projects where location-specific considerations like soil types have made it difficult to achieve scale effects. The company has also faced project delays and setbacks on major contracts when input prices like steel rose.
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.