Monday’s listing is the latest step in the unwinding of Siemens
-- a German conglomerate making a vast array of goods that spans medical scanners, locomotives and gas turbines -- into separate companies
better suited to confront their own unique challenges.
The sale is taking place at a time of transition toward greener energy sources, which could hit Siemens Energy’s dominant coal and gas-turbine business and cloud the company’s long-term growth prospects. There will be no shortage of hindrances ahead for the extraction, processing, and transportation of oil and gas, as well as the generation, transmission and distribution of power and heat that it handles.
“Siemens Energy’s spinoff showcases a gas-turbine technology whose growth has been stunted by climate change, though gas should remain a key energy source,” Johnson Imode, an industry analyst for Bloomberg Intelligence, wrote in a Sept. 23 report. He estimated Siemens Energy may be worth about 20 billion euros based on its guidance for earnings next year.
Siemens Energy shares will be “volatile with ups and downs” over the next two or three weeks as some shareholders like the Siemens pension fund may sell their holdings, Ralf Thomas, Siemens AG’s finance chief, told Bloomberg at the Frankfurt stock exchange Monday.
Siemens intends to keep a blocking minority stake of the business of around 25% for the next five years after its initial sale of shares over the next 18 months, he said. Siemens shares surged as much as 9% Monday, the biggest gain since March.
The listing is one of the last moves under Chief Executive Officer Joe Kaeser to turn one of Europe’s largest industrial manufacturers into a more manageable entity. The 63-year-old’s spinoff of its medical business, Siemens Healthineers AG, was Germany’s biggest initial public offering of the past four years.
Both Healthineers and Energy could be candidates for Germany’s benchmark DAX index. The index, which adds and drops members at least once a year, typically in September, might then have four Siemens-affiliated companies
in it, including Infineon Technologies AG, which was spun off in 1999.Siemens Energy will own a majority stake in separately listed wind-power company Siemens Gamesa Renewable Energy SA, and last year generated revenue of 28.8 billion euros with 91,000 employees.
Siemens handed 55% of Siemens Energy shares to its shareholders, and the parent has said it will further reduce its stake within 12 to 18 months, which could reignite interest in consolidation, according to BI’s Imode.
Before deciding on a spinoff, Siemens mulled other options for the business. Bloomberg News reported last year that Mitsubishi Heavy Industries Ltd. held talks with the company about a possible gas-turbine business combination, and that Siemens had discussions with other firms about a full or partial sale of its division.
Siemens still holds 79% of Siemens Healthineers stock, which has been among the more successful recent listings in Germany. A plan to combine Siemens’s railway business with Alstom of France, however, was vetoed by the European Commission.
Kaeser will leave the carrying out of one more spinoff to his successor, Roland Busch, who will take over most CEO responsibilities later this week. In February, the company will present shareholders with its plan to offload its Flender GmbH unit that makes mechanical drives in what will be a company with about 2 billion euros in sales and 8,500 employees.