Germany’s Siemens (ETR:SIE) and Spain’s Gamesa (BME:GAM) today announced that following six months of negotiations they have signed a binding deal to merge their respective offshore and onshore wind power businesses.
The combination will create a wind power company with a 69-GW global installed base, an order backlog of about EUR 20 billion (USD 22.5bn), revenue of EUR 9.3 billion and adjusted earnings before interest and tax (EBIT) of EUR 839 million based on the businesses’ performance for the 12 months through March 2016.
The enlarged company will have its global headquarters in Spain and will be listed on the Madrid Stock Exchange, the parties said in a joint press statement. The onshore headquarters will in Spain, while the offshore headquarters will reside in Hamburg, Germany, and Vejle, Denmark.
Under the terms of the deal, Siemens will merge its own wind division, including the service arm, with Gamesa and take a 59% stake in the enlarged firm. Gamesa’s existing stockholders will receive a cash payment of EUR 3.75 per share and will end up with a combined 41% interest in the company. Iberdrola SA (BME:IBE), currently the largest investor in Gamesa, will hold an 8% stake in the combined entity.
French nuclear power company Areva SA (EPA:AREVA) has agreed to facilitate the tie-up by waiving existing contractual restrictions in its offshore wind joint venture with Gamesa. Areva will be granted a put option for its 50% stake and a call option for Gamesa’s own half in the JV, known as Adwen. Areva will also have the chance to sell 100% of Adwen to a third party via a drag-along right for Gamesa’s shareholding.
The wind businesses merger is seen to create annual EBIT synergies of EUR 230 million in total in the fourth year following completion of the transaction. The combined business will benefit from Siemens’ strong position in North America and Northern Europe, and Gamesa’s foothold in India, Latin America and in Southern Europe.
The merger needs to receive the green light from Gamesa’s existing stockholders. Iberdrola has already entered into a shareholders agreement with Siemens in connection with the plan. In addition, the transaction must be cleared by Spanish stock market regulator CNMV.
Completion is scheduled for the first quarter of 2017.
(EUR 1.0 = USD 1.126)
Source: Other