Siemens has identified three key points which could delay or even thwart the deal it is negotiating with Spanish firm Gamesa.
The first point has to do with the current situation regarding Spain’s new government and its composition.
Secondly, the European Competition Comission has to approve the reduction of the number of industry players. If this operation goes ahead, the only remaining competitor would be Vestas.
This point is obvious and is part of the ‘due diligence’ procedure. The lack of competitors is a problem Siemens must solve. If not, the deal could be blocked.
So it is important that Siemens solves it successfully. This would mean the German company only opting for a stock option on Gamesa, something that Siemens would obtain via a capital increase.
If this is the case, Bankinter’s analysts believe the appeal of the deal would be significantly reduced for Gamesa’s shareholders. It would not in any way be an offer, but the incorporation of a new partner, which would dilute the current shareholders’ stock options.
The company’s new value would depend on the valuation agreed for Siemens’ assets.
If Siemens does enter the company through a capital hike, this would have to be aproved by Gamesa’s board and shareholders. The move is unlikely to happen because, firstly, Siemens would not contribute cash but assets. And, secondly, Gamesa has a healthy financial situation and doesn’t need a capital increase to strengthen its balance sheet.
If Siemens makes a full takeover bid for Gamesa, the less attractive option for the German company would be an exchange of shares. This would be dilutive in 2016 and 2017. The most attractive option would be a cash acquisition. This would be EPS enhancing from 2016, unless the premium paid was over 25%.
At this point, the next event which could help define the outcome of the talks between Siemens and Gamesa is the Supervisory Council’s meeting due to be held mid-March.
