German capital goods major Siemens will get a stronghold in the Indian wind energy, where it had a late entry, after signing an agreement with Spain’s Gamesa to combine their wind energy business to create the world’s biggest builder of windfarms. Siemens has struggled to turn its wind energy business profitable and its business in India, through its listed arm, is a fledgling business. Siemens will hive off its wind energy business and merge it with Gamesa. Siemens will hold 59% stake in the merged entity, while Gamesa will hold the balance 41%. “India was the biggest market for Gamesa globally representing 29% of the global business. The Indian businesses of the two companies are complimentary. Siemens has a fairly small presence in India, while we installed 1,003 mw of wind turbine capacity in India in 2015-16,” Ramesh Kymal, chairman and managing director of Gamesa India, told ET. A spokesperson from Siemens in India said that they are studying the deal details and it was early to comment on its implications of India business. A spokesperson from Siemens in India said that they are studying the deal details and it was early to comment on its implications of India business. As part of the merger, Siemens will pay in cash Euros 3.75 a share to shareholders of Gamesa upon completion of merger. The cash payment represents 26% of Gamesa’s unaffected share price at market close on January 28, 2016. The new company, which will be consolidated in Siemens’ financial statements, is expected to have a 69 gigawatts installed base worldwide, an order backlog of around 20 billion, revenue of 9.3 billion and an adjusted EBIT of 839 million. The combined company will have its legal domicile and global headquarters in Spain and will remain listed in Spain. 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. The combined business will fit right into our Siemens Vision 2020 and underlines our commitment to affordable, reliable and sustainable energy supply,” said Joe Kaeser, President and CEO of Siemens AG. India aims to scale up its wind energy capacity to 60 gigawatts by 2022 from around 27 gigawatts now, making it a growth destination for European wind turbine and engineering companies. In February, Siemens and Gamesa agreed in principle to combine their wind businesses but the deal was delayed because the latter had to renegotiate its contract for an offshore wind joint venture, known as Adwen, with French engineering company ArevaBSE -2.00 % SA.
Source: ET Bureau