Siemens has bought out Iberdrola’s stake in wind turbine manufacturer Siemens Gamesa Renewable Energy, potentially ending a period of acrimony between the two companies and bringing a major customer back into SGRE's fold.
Siemens will pay a 32 percent premium, or €20 per share ($22), to buy Iberdrola's 8.1 percent stake in SGRE for a total cost of €1.1 billion ($1.2 billion). That allows Iberdrola to more or less recoup its initial investment into SGRE.
The deal brings Siemens' total stake in SGRE to 67 percent. The German industrial giant plans to transfer its shares in SGRE to the soon-to-be-created Siemens Energy, which will be spun off in an IPO planned for later this year.
Spain's Iberdrola, among the world's largest wind farm developers and operators, was long a major turbine customer of Gamesa, which merged with Siemens Wind in 2016. But since the merger, relations between the two companies deteriorated.
Last year Iberdrola took SGRE to court in Spain, alleging a conflict of interest between Siemens and certain SGRE executives. Proceedings were halted last month, triggering speculation that a buyout of the stake was in the cards. All legal disputes have been ended as part of the deal.
Iberdrola reportedly had been unhappy with the financial performance SGRE for some time but was unwilling to take a steep cut on its shares. Iberdrola was the largest shareholder in Gamesa prior to the 2016 merger.
The terms of the new deal between Siemens and Iberdrola may bring a thaw in their relations, granting a period of negotiation for SGRE and Siemens over supply contracts for a number of Iberdrola’s wind and grid projects. Iberdrola has not placed an order with SGRE since 2018.
"For onshore, they are sourcing Vestas and GE turbines, while for offshore projects they are choosing MHI Vestas turbines,” said Shashi Barla, Wood Mackenzie's principal analyst for the global wind supply chain. “An exception to this will be in Brazil, where they have signed a large agreement with Iberdrola for 470 megawatts.”
“The industry will be keen to watch how the exclusive negotiation rights for future offshore projects will develop," Barla added. "These [exclusive negotiation] rights may be related to offshore wind projects, especially to the grid infrastructure solutions from Siemens, not necessarily turbines from SGRE."
Iberdrola's subsidiary ScottishPower Renewables is developing the East Anglia 2 and 3 projects with a total capacity of up to 2.3 gigawatts in U.K. waters. A turbine supplier has not been selected. SGRE, the world's leading offshore wind turbine supplier, is already set to supply 102 of its 7-megawatt turbines for the East Anglia 1 project, which will be fully operational this year.
Siemens Energy IPO details
In announcing its Q1 results Wednesday, Siemens also confirmed the timeline for the IPO.
The complex carve-out is set for completion by the end of March; it will legally transfer the gas and power unit and other relevant assets to the new Siemens Energy business. Shareholders will vote on the plan on July 9 at an extraordinary meeting. The new company will be marketed to investors in September ahead of the IPO itself.
There will be no specifics on the target for the raise until the carve-out is complete, according to Siemens Deputy CEO Roland Busch.
In a statement on the Q1 results, Siemens CEO Joe Kaeser called SGRE the “cornerstone” of the new Siemens Energy business.
“Siemens Energy will play a key role in the worldwide transition from conventional power generation to renewable energies. It will also make important contributions to the transition from fossil fuels to synthetic fuels and energy source systems based on green hydrogen,” Kaeser said.
“In this connection, a robust, profitable and innovative business in the renewable energy field is a key prerequisite for success. For us, this business is Siemens Gamesa Renewable Energy,” Kaeser added.
Join Wood Mackenzie's upcoming wind webinar, Winds of change in onshore wind O&M - a look into 2020s, on February 20th, at 11:00am GMT.