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    SGRE   ES0143416115

SIEMENS GAMESA RENEWABLE ENERGY, S.A.

(SGRE)
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Real-time Estimate Tradegate  -  04:00 2022-07-05 pm EDT
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Siemens Gamesa turnaround will take years, main owner says after $4.3 bln bid

05/23/2022 | 02:44am EDT

* No clear signs of near-term recovery at Siemens Gamesa

* Siemens Energy bids 4.05 bln eur for remaining stake

* Siemens Gamesa shares +6.2%, Siemens Energy -0.8% (Adds details on underwriters, adviser, updates shares)

MADRID/FRANKFURT, May 23 (Reuters) - Siemens Energy warned on Monday that a turnaround at Siemens Gamesa will take several years, adding that a 4.05 billion-euro ($4.3 billion) bid to buy out minorities of the struggling wind turbine unit was the only way to fix the issues.

"It's nothing which will go fast," Siemens Energy Chief Executive Christian Bruch told journalists on Monday, less than two days after unveiling the offer. He added this meant "multiple years of really turning" Siemens Gamesa around.

Siemens Energy has faced pressure from shareholders to raise its stake in Siemens Gamesa from the 67% it inherited after a spinoff from Siemens AG.

Shares of Spanish-listed Siemens Gamesa rose 6.2% to about 17.79 euros at 1518 GMT, just below the 18.05 euro-per-share offer price. Siemens Energy fell 0.8%.

Siemens Gamesa, whose shares had fallen 20% since the start of the year until the offer was made, had issued three profit warnings in less than a year, dogged by product delays and operational problems.

Most European turbine makers have also racked up losses in a fiercely competitive market as metals and logistics prices surged due to COVID-19, import duties and Russia's invasion of Ukraine.

"There are not yet clear signs of a near-term recovery in the current setup," Bruch said, adding that Siemens Gamesa's financial performance was "really creating the need for action."

FULL CONTROL

Bruch said owning all of Siemens Gamesa would remove an arms-length relationship and give Siemens Energy more control over the asset as well as lead to cost savings and procurement efficiencies.

Asked about the onshore turbine business which has caused particular headaches, Bruch said there were no plans to sell it.

While Siemens Energy will be able to delist Siemens Gamesa once it owns 75%, Bruch said a full integration of the division, which was created from the merger of Siemens AG's wind business and Spain's Gamesa, was the clear goal.

The relatively low additional stake Siemens Energy needs for a delisting, however, is expected to provide at least a certain hurdle against potential attacks from hedge funds that could decide to buy in to Siemens Gamesa to push for a higher price, industry sources said.

Under a tentative timeline, the bid, which Credit Suisse analysts said was "disappointing," would launch in mid-September before an extraordinary general meeting rubber-stamps it in November, Siemens Energy said.

The funding of the deal is fully underwritten by Bank of America and JP Morgan. Perella Weinberg Partners is advising Siemens Energy on the transaction.

When asked why the offer was below the 20 euros Siemens paid for Iberdrola's stake in Siemens Gamesa in 2020, Bruch said that since then the situation at the division had deteriorated and that the offer was attractive. ($1 = 0.9431 euros)

(Reporting by Isla Binnie in Madrid and Christoph Steitz in Frankfurt Editing by Edmund Blair, Emelia Sithole-Matarise and Matthew Lewis)


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
IBERDROLA, S.A. -1.41% 10.125 Delayed Quote.-1.34%
PERELLA WEINBERG PARTNERS 4.28% 6.09 Delayed Quote.-54.59%
SIEMENS AG -3.68% 93.74 Delayed Quote.-36.26%
SIEMENS ENERGY AG -5.14% 13.37 Delayed Quote.-37.33%
SIEMENS GAMESA RENEWABLE ENERGY, S.A. -0.11% 17.83 Delayed Quote.-15.28%
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Analyst Recommendations on SIEMENS GAMESA RENEWABLE ENERGY, S.A.
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Financials
Sales 2022 9 553 M 9 787 M 9 787 M
Net income 2022 -734 M -752 M -752 M
Net Debt 2022 1 287 M 1 319 M 1 319 M
P/E ratio 2022 -17,2x
Yield 2022 -
Capitalization 12 139 M 12 436 M 12 436 M
EV / Sales 2022 1,41x
EV / Sales 2023 1,33x
Nbr of Employees -
Free-Float 32,9%
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Number of Analysts 15
Last Close Price 17,83 €
Average target price 17,90 €
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Jochen Eickholt Chief Executive Officer & Executive Director
Beatriz Puente Ferreras Chief Financial Officer
Miguel Angel López Borrego Chairman
Alan Feeley Chief Information & Cyber Security Officer
Antonio de la Torre Chief Technology Officer