Germany-based engineering and technology major Siemens AG is planning to increase its stake in the Indian subsidiary, Siemens Ltd, from the present 55.18 per cent to 75 per cent with an offer of ¤1 billion ($1.4 billion/Rs 6,215 crore).
The offer, announced this morning, triggered Siemens Ltd’s share prices to rise 17.3 per cent on the Bombay Stock Exchange (BSE) to close at Rs 853.50 per share and touch a 52-week high of Rs 884.95 per share during intra-day trading.
Siemens Ltd said the German parent company has made an open offer to buy 19.82 per cent equity in the company at Rs 930 per share or a 28 per cent premium to Friday’s closing price.
“Siemens AG is making a voluntary offer to public shareholders of Siemens for acquiring up to 66,829,060 fully paid-up equity shares of the company constituting 19.82 per cent at a price of Rs 930 per equity share in order to consolidate its shareholding in the target company,” Siemens said in a filing to BSE.
Siemens’s rival and Swiss engineering major ABB had last year raised its holding in its Indian subsidiary to 75 per cent, paying about $1 billion for the stake, said sources.
Pursuant to the completion of the offer, Siemens AG will hold 252,870,150 equity shares in Siemens representing 75 per cent stake. HSBC Securities and Capital Markets will manage the offer, which is expected to open on March 25 and close on April 13.
“Siemens is expanding its stake with the aim of further developing its business in India,” said a company spokesperson.
Siemens is present in India for the last 100 years in various business segments from power to medical equipment and has revenues in excess of Rs 12,000 crore from its 22 odd companies operating in India. Siemens Ltd is the flagship business of the group in India and it recorded revenues of Rs 9,400 crore in 2009-10.
Siemens India is targeting to earn over one billion euros (Rs 6100 crore ) from localised base products within the next ten years, Armin Bruck, chief executive of Siemens Ltd had said in a recent interaction.
Base level products are simple to use, standard technology-based products are designed for basic requirements of domestic markets in a cost-effective way. At present, such products contribute only 100 million euros (Rs 610 crore) to the annual turnover of Siemens in India. The country has a potential of 70 billion euros (over Rs 40,000 crore ) from such products, estimates Siemens.
Siemens plans to set up six new centres of competence in India for base-level products with 60 products in the pipeline. The company is developing products like ring main units, steam turbine generators of above 45 Mw capacity, solutions for iron and steel making equipment, engineering, procurement and construction (EPC) for full turnkey power plants, wind turbines and low-end signalling systems, all targeted at the Indian market.
The company is also investing Rs 200 crore in Goa over the next few years to set up two manufacturing facilities for energy automation and medium voltage products.
