Siemens to acquire 18% in Indian arm from Siemens Energy for 2.1 bn euros

German conglomerate Siemens Aktiengesellschaft (Siemens AG) will acquire an 18 per cent additional stake in Siemens Ltd India for 2.1 billion euros ($2.28 billion), the company announced on Wednesday. With this, the company's total stake in its Indian arm will jump to 69 per cent from 51 per cent earlier. Siemens Energy's stake will decrease from 24 per cent to 6 per cent.

The purchase price reflects a 15 per cent discount from the 5-trading-days volume-weighted average price before the day of signing. Siemens will provide no new guarantees to Siemens Energy.

In 2020, Siemens AG offloaded about 47.7 per cent stake in its India arm, Siemens Ltd. However, Siemens and Siemens Energy did not separate their businesses in India as it was not feasible at that time, the company said.

"As a next step, Siemens and Siemens Energy have agreed to propose to the Board of Directors of Siemens Ltd. India is a demerger of the energy business. Siemens Energy is to ultimately acquire a controlling stake in the demerged energy business. The aim is to complete the demerger in 2025 – significantly earlier than previously planned," it added.

The company also said that it has agreed with Siemens Energy's indirect financial measures totalling one billion euros to allow third parties to arrange guarantees for Siemens Energy.

Firstly, Siemens will allow Siemens Energy to use its 5 per cent shareholding in Siemens Ltd India, worth 750 million euros, as collateral for guarantees. If the collateral is drawn, Siemens has committed to buy up to 5 per cent of shares in Siemens Ltd India for 750 million euros ($815 million).

Secondly, Siemens will grant payment deferrals at market conditions of 250 million euros ($271 million), which will also be used as collateral for guarantees. "These commitments enable Siemens Energy to provide appropriate collateral for the bank consortium providing a guaranteed line. This line serves to secure Siemens Energy's business development and participation in the German energy transition," it said.

Regarding the development, Roland Busch, president and chief executive officer of Siemens AG, said, "For our shareholders, the accelerated demerger of Siemens Ltd. 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."