German multinational technology conglomerate Siemens AG intends to enter into a share purchase agreement with Siemens Energy to acquire an 18% stake in Siemens Ltd. India from Siemens Energy, for a purchase price of 2.1 billion euro in cash, the company said on Wednesday.
This would increase Siemens’ stake in the publicly listed Siemens Ltd. India from 51% to 69%, while 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,” the company said in a press statement, adding that 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.
“Together, we shaped a solution that is in the best possible interests of all parties and accelerates the separation of Siemens and Siemens Energy in India,” said Roland Busch, President and Chief Executive Officer of Siemens AG, adding that besides the immediate cash inflow, “we are also enabling an additional line for customer guarantees, making a strong overall contribution to the future stability and growth of Siemens Energy.”
Siemens has also agreed with Siemens Energy for indirect financial measures worth €1 billion, to allow third parties to arrange guarantees for Siemens Energy.
The parent will allow Siemens Energy to use its 5% shareholding in Siemens India worth €750 million, as collateral for guarantees. In case the collateral is drawn, the parent has committed to buying up to 5% shares in the India unit for the said amount.
Additionally, Siemens has also granted payment deferrals at market conditions worth €250 million, which will also be used as collateral for guarantees.
“This line serves to secure Siemens Energy’s business development and participation in the German energy transition,” the statement said.
Shares of Siemens India are trading at Rs 3,489, up 2.10% on the BSE.