Iberdrola, which has 8% of Gamesa’s capital and supported the merger deal with Siemens sealed last year, is uncomfortable with Siemens management in Gamesa. The merger agreement was subject to some conditions regarding the management and corporate governance of the new Gamesa, which Iberdrola is of the opinion could be improved.
As the deal included Siemens’ commitment to upholding the industrial objective of the transaction, allowing it to be exempt from launching a full bid, Iberdrola has now called on the CNMV to force Siemens to fulfil its industrial commitment.
In the end, Spain’s Stock Market Regulator (CNMV) has told Iberdrola that it does not recognise, as of today’s date, any circumstance which requires a revision of the exemption granted to Siemens from being obliged to launch a takeover bid for Gamesa.
The clash between Siemens and Iberdrola was obvious at the Annual Shareholders’ Meeting on March 23. Later, the Spanish energy firm’s chairman, Ignacio Sánchez Galán, and the CEO of the German group, Joe Kaeser, met in Madrid to mend fences, without success. After that meeting, Iberdrola turned to the CNMV.
The merger agreement between Iberdrola and Siemens established that in the event of non-compliance on the part of the German group with respect to any of the obligations and commitments made, the Spanish firm would have the right to sell its stake to Siemens. Bankinter analysts explain that:
“This corporate governance pact over Gamesa which Iberdrola and Siemens have was essential for the latter to take control of Gamesa without having to launch a takeover bid. The argument was that it was an industrial project, and not just an acquisition.”
In Iberdrola’s view, Siemens was complying with key elements of the agreement and for that reason demanded that the latter launched a bid for Gamesa. Siemens has 59% of the wind turbine manufacturer.
If there is proof that Siemens is to blame for the pact between the two companies being broken, Iberdrola could demand that the German group buys its 8% stake at 22 euros/share, or 1.2 billion euros.
Or, alternatively, at Gamesa’s closing share price on the day the non-compliance happened plus a 30% premium.
Notwithstanding, the CNMV has asked for a range of information from Iberdrola in relation to Siemens Gamesa’s corporate governance to make a final decision.