Siemens AG to acquire 18% stake in Siemens India for €2.1 billion

Siemens AG intends to enter into a share purchase agreement with Siemens Energy to acquire an 18% stake in Siemens India Ltd. The purchase consideration for the transaction is €2.1 billion, a statement from the company said.

The purchase price reflects a customary discount of 15% on the five-trading-days volume weighted average price before the day of the signing. Siemens will also provide no new guarantees to Siemens Energy.

Siemens and Siemens Energy have agreed to propose to the board of Siemens India a demerger of the energy business. Siemens Energy will ultimately acquire a controlling stake in the demerged energy business. The demerger is proposed to be completed in 2025, earlier than previously planned.

In an interview with CNBC Network, Siemens Energy CEO Christian Bruch said that India is a "super important market" for both entities. He further said that the way the company operates in India will not change and that they had to untangle Siemens AG and Energy in India. Bruch also said that untangling the business will be a multi-year process.

As of September 30, Siemens International holds a 47.7% stake in Siemens India, along with Siemens Metals, which holds a 3.3% stake. Together, both companies hold a 51% stake in the India entity.

Post the acquisition, the combined stake will rise to 69%, while that of Siemens Energy will fall to 6% from 24% earlier.

Siemens has also agreed with Siemens Energy for indirect financial measures worth €1 billion, to allow third parties to arrange guarantees for Siemens Energy.

The parent will allow Siemens Energy to use its 5% shareholding in Siemens India worth €750 million, as collateral for guarantees. In case the collateral is drawn, the parent has committed to buying up to 5% shares in the India unit for the said amount.

Additionally, Siemens has also granted payment deferrals at market conditions worth €250 million, which will also be used as collateral for guarantees.

"This line serves to secure Siemens Energy's business development and participation in the German energy transition," the statement said.

Shares of Siemens India are at the day's high, up 2.6% at 3,521.15. The stock is up 25% so far in 2023.