Siemens AG acquires 18% stake in Siemens India for €2.1bn
What's the story
Siemens AG is set to acquire an 18% stake in Siemens India for €2.1 billion (around Rs. 3,380 per share) from Siemens Energy. Following this news, Siemens' stock saw a 3% increase, with shares trading 2.2% higher at Rs. 3,492.15 on the NSE at 12:53pm. This move will boost Siemens AG's ownership in Siemens India to nearly 66%, while Siemens Energy's stake will drop to 6%.
Details
Impact on shareholding and Siemens Energy's motive
At present, Siemens AG has a 47.7% share in Siemens India, while Siemens Energy holds 24%, based on the firm's shareholding data at the end of the September quarter. Siemens Energy's decision to sell most of its stake in the Indian joint venture to its parent company is aimed at bolstering its balance sheet and capital base. Moreover, Siemens Energy has proposed a demerger of Siemens India's energy business and intends to acquire a majority stake in the separated entity.
What Next?
Background and future plans for Siemens Energy
Bloomberg initially reported on Siemens Energy's potential divestment plans in its Indian JV. This development comes amid ongoing talks between Siemens Energy, the German government, Siemens AG, and banks regarding €15 billion in guarantees to protect large industrial projects. Additionally, Siemens AG has permitted Siemens Energy to utilize its 5% stake as collateral for guarantees, which the former will purchase for €750 million if the latter opts to utilize it as collateral.