March 9, 2020 / 2:36 PM / in 23 days

Siemens aims for 30% stake in Siemens Energy after spin-off - sources

MUNICH/FRANKFURT (Reuters) - Siemens (SIEGn.DE) aims to keep a minority position in turbines maker Siemens Energy, which the German industrial conglomerate is spinning off later this year as it continues with a corporate restructuring, people close to the matter said.

FILE PHOTO: The headquarters of Siemens AG is seen in Munich, Germany, December 18, 2019. REUTERS/Michael Dalder/File Photo

Siemens has been divesting its businesses one by one, avoiding the attention of activist investors who have sought the break up of other industrial giants such as Switzerland’s ABB (ABBN.S) and Germany’s ThyssenKrupp (TKAG.DE). Shares of such companies which operate across several different sectors often trade at a discount because they are more complex to run than those that focus on a single industry.

Siemens plans to hand over about 70% of the shares in Siemens Energy while retaining roughly 30%, allowing it to deconsolidate the business, the people said.

The company is working with Goldman Sachs (GS.N), Deutsche Bank (DBKGn.DE), JP Morgan (JPM.N) and BNP Paribas (BNPP.PA) on the planned spin-off, which could give the unit a valuation of up to 10 billion euros ($11.42 billion), the sources said.

“There is no decision on the shareholding structure of Siemens AG in the future Siemens Energy”, a Siemens spokesman said.

The banks declined to comment or were not immediately available for comment.

Some analysts have said they expect Siemens Energy to post earnings before interest, tax, depreciation and amortisation of about 1 billion euros (869.5 million pounds) in 2021, while people close to the matter have said the company could be valued at 8-10 times that.

Peers such as Mitsubishi Heavy (7011.T), ABB, GE (GE.N), Vestas (VWS.CO) and Nordex (NDXG.DE) trade at 8-11 times their expected EBITDA.

The expected valuation suggests the spun-off unit would be unlikely to qualify for entry to Germany’s blue-chip index .GDAX as it would not eclipse aspirants such as Deutsche Wohnen or Symrise, which have a free floating market cap of 13 billion and 10 billion euros respectively.

While the bulk of shares will go to existing Siemens investors, the company may also bring in cornerstone investors for stakes of around 5%, the people said.

Siemens own pension fund as well as sovereign wealth funds are possible candidates for such investments, they added.

A Siemens extraordinary general meeting will take place on July 9 to get shareholder approval for the spin-off, which could take place on September 28.

The energy business spans traditional large gas turbines, whose sales have slumped with the shift to renewable power, but also wind turbines, where Siemens is the global no. 2 behind Vestas.

Joe Kaeser, who has led Siemens since 2013, has already spun off its healthcare business, merged its wind-power operations with Spain’s Gamesa and sold the group’s remaining home-appliance business to joint-venture partner Bosch.

Reporting by Alexander Huebner and Arno Schuetze; editing by Thomas Seythal, Kirsten Donovan

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