Energy giant Siemens has made a shock announcement – the multinational will be selling off its €30 billion majority of its Gas and Power division, made up of conventional power generation, transmission, oil and gas, and its 59% stake in Siemens Gamesa Renewable Energy.
The sale of the stake will likely see the “creation of a new “major player on the energy market.”
The company’s supervisory board made the announcement on 07 May, as part of its Vision 2020+ strategy. The move said the board, will help the company meet its medium-term growth and profitability goals by “clearly focusing its portfolio on dynamic growth markets and efficiency gains.”
The move, likely to affect 80,000 employees will give the new company “complete independence and entrepreneurial freedom” and a new stock exchange listing for the company is expected by September 2020.
The sale will create a “powerful pure play in the energy and electricity sector with a unique, integrated setup – an enterprise that encompasses the entire scope of the energy market like no other company,” explained Joe Kaeser, president and CEO of Siemens AG. “Combining our portfolio for conventional power generation with power supply from renewable energies will enable us to fully meet customer demand. It will also allow us to provide an optimized and, when necessary, combined range of offerings from a single source.”
Decisions around the sale and the public listing are still to be bedded-down, and will likely be addressed at a shareholders meeting in June 2020.
The company has said it will remain a “strong anchor shareholder in the new company, with a stake that is to be initially somewhat less than 50% and, for the foreseeable future, above the level of a blocking minority holding”.
Siemens also plans to offer the new company its financial services and its regional sales networks, and “the licensing of the powerful Siemens brand.”
The move will see the Germany-based company’s Digital Industries (DI) and Smart Infrastructure (SI) divisions become core units. “This core will be supplemented by company-wide technology and service units and the company’s strategic majority stake in Siemens Healthineers. Siemens Mobility is also to be further strengthened as a growth business,” the company said.
According to Kaeser, Siemens is certain that the sale “will be positive for all participants and enable long-term value creation for customers, employees and shareholders.”
The company also plans to “jointly pursue” some its current commercial successes, such as the deal to revive Iraq’s electricity grid, valued at $15 billion.
Lisa Davis head of Siemens’ Gas and Power division, said that the move would help it “more effectively leverage our position of strength to further support our customers in rapidly changing energy markets.”