German technology conglomerate Siemens intends to sign an agreement with Siemens Energy to purchase an 18% stake in Siemens India for €2.1bn.
Siemens currently holds a 51% stake in Siemens India, while Siemens Energy owns a 24% stake at the end of the quarter ended 30 September 2023.
The transaction would increase its stake in Siemens India to 69% and decrease Siemens Energy’s stake in Siemens India to 6%.
Siemens said that the stake purchase would support the stability of Siemens Energy and advance the separation of its operations in India, which is in the best interests of all parties.
In addition, the proposed acquisition would allow Siemens and Siemens Energy to advance the expansion of the business activities of Siemens India.
Siemens president and CEO Roland Busch said: “Together, we shaped a solution that is in the best possible interests of all parties and accelerates the separation of Siemens and Siemens Energy in India.
“Besides the immediate cash inflow, we are also enabling an additional line for customer guarantees, making a strong overall contribution to the future stability and growth of Siemens Energy.
“For our shareholders, the accelerated demerger of Siemens India’s energy activities will further sharpen the portfolio focus of Siemens. It also simplifies and strengthens our corporate structure in India, a fast-growing and strategically important market.”
During the spin-off in 2020, Siemens and Siemens Energy did not separate their businesses in India but agreed to a demerger of their energy business in India.
Siemens Energy would ultimately acquire a controlling stake in the demerged energy business, with plans to complete the demerger earlier than the planned date in 2025.
Siemens has agreed with Siemens Energy to allow third parties to arrange guarantees, in exchange for indirect financial measures totalling €1bn.
Initially, Siemens will allow Siemens Energy to use its 5% shareholding in Siemens India, worth €750m as collateral for guarantees.
In addition, the parent organisation will grant payment deferrals worth €250m at market conditions, which will also be used as collateral for guarantees.
The commitments will enable collateral for the bank consortium providing a guarantee line, which secures Siemens Energy’s business development in the German energy transition.
In a separate development, the German government had decided to backstop Siemens Energy with guarantees worth €7.5bn as part of a deal with other stakeholders to fulfil its order book.
The guarantees are part of a €15bn package agreed with private banks and other stakeholders and would also impose a pause on dividends and higher-level bonuses at Siemens Energy.
