Bankinter | For weeks, financial circles have been hovering around the idea of the German giant taking full control of its subsidiary. The market is speculating on a possible stock market exclusion of Siemens Gamesa, in which it currently holds a 67% stake, according to Expansion. The same sources flag that the CEO of Siemens Energy commented that “it is not currently on its agenda.” The remaining 33% of the capital would represent at market prices some 5.833 billion euros.
The Siemens Group last year bought Iberdrola’s 8% holding in Siemens Gamesa at 20 euros/share. It later integrated its stake in the subsidiary, along with the former oil & gas division, into a new company called Siemens Energy. After the spin off and transfer of part of this new company to the shareholders, the Siemens Group owns 35% (+9.9% in the Pension Fund) of Siemens Energy, which in turn owns 67% of Siemens Gamesa.
Siemens Energy currently seems to rule out a bid for the remaining 33% of Siemens Gamesa. However, from a strategic point of view, the integration would simplify the structure and facilitate possible deals in the research studies in which the companies in the sector are currently involved.
Siemens Gamesa is one of the leaders in the wind energy sector, especially in offshore, which will play an important role in renewable energy investments in the coming years. In recent years it has suffered many problems with its profit margins, especially in onshore, where it is still looking to return to profitability. It aims to recover a long-term average profitability of between 8%/10% EBIT margin (pre-adjustments) versus 7.1% in 2019 and -2.5% in 2020 (4.8% Q2’21, although the company warned about the possible increase in the cost of supplies in H2’21).
The share price has fallen from its highs (38.48 euros/share) by 32.6%. Our valuation points to 28.5 euros/share, which would mean around 6.4 billion euros for the 33% stake in Siemens Gamesa. That said, if this were to happen we would have to see the valuation and the form of payment (cash or shares). Our estimates already contemplate a scenario of strong growth in the coming years (our estimates already contemplate offshore installations until 2025 that incorporate the 8GW in the portfolio plus 7.4GW in the pipeline) and leave little room for pressure from higher supply costs or increased competition.