Planned merger would create wind behemoth

Source: Daniel Cusick, E&E reporter • Posted: Sunday, June 19, 2016

Two major European energy companies, Siemens and Gamesa, will combine their wind divisions under an agreement announced this morning that should establish a new market leader in the world’s largest renewable energy sector.

Under a binding agreement valued at €1 billion ($1.13 billion), Siemens AG, headquartered in Germany but with a global supply chain extending across a number of sectors and countries, will acquire majority stake in Gamesa Corporación Tecnológica SA of Spain.

The new company would retain Gamesa’s Madrid headquarters for onshore wind operations, while offshore wind projects will be managed from offices in Germany and Denmark, according to terms disclosed in a press release.

“The two businesses are highly complementary in terms of global footprint, existing product portfolios and technologies,” officials said in a statement. “The combined business will have a global reach across all important regions, and manufacturing footprints in all continents.”

Siemens would hold five out of 13 seats on the company’s board of directors, but it would effectively own the firm with 59 percent of combined shares, and all financial disclosures would be reported by Siemens, officials said.

Gamesa’s existing shareholders would own 41 percent of the company. In addition, Siemens will pay Gamesa shareholders a nearly €3.75-per-share ($4.22) cash dividend.

The deal is subject to Gamesa shareholder approval, and it must receive the endorsement of Spain’s National Securities Market Commission, since the combined company would be formally listed in that country. Officials said they hope to finalize the deal by the first quarter of 2017.

A combined Siemens-Gamesa wind energy firm would have a global generation portfolio of 69 gigawatts and more than 60,000 employees. The new company would have revenues of nearly €9.3 billion ($10.5 billion) and adjusted earnings before taxes of €839 million ($945 million). Combined existing turbine orders from the two companies amounts to roughly €20 million ($22.5 million), according to officials.

The company would also overtake Vestas Wind Systems A/S as the world’s largest wind energy company, while also bolstering its market position in Europe, North America, Latin America and South Asia, officials said. Gamesa is generally viewed as a leader in wind energy development in emerging markets, including India and Brazil, while Siemens has a major presence in Europe and North America.

“The combination of our wind business with Gamesa follows a clear and compelling industrial logic in an attractive growth industry, in which scale is a key to making renewable energy more cost-effective,” Joe Kaeser, president and CEO of Siemens, said in a statement. “With this business combination, we can provide even greater opportunities to the customers and value to the shareholders of the new company.”

Officials estimate the merger will save up to €230 million ($260 million) through greater scaling and other efficiencies by the fourth year of operations.

Two other firms were also affected by the deal. Iberdrola SA, also of Spain, agreed to dilute its holdings in Gamesa from 20 to 8 percent, while Areva SA of France agreed to waive contractual obligations made by Gamesa in the company’s formation of a 50/50 offshore wind energy venture called Adwen.