Siemens AG To Expand Its Presence In India With €2.1 Billion Investment

In a strategic move to strengthen its foothold in the Indian market, Siemens AG has announced its intention to acquire an 18% stake in Siemens India Ltd. through a share purchase agreement with Siemens Energy. The purchase consideration for this significant transaction amounts to €2.1 billion, as revealed in a statement from the company.

The purchase price, set at a 15% discount on the five-trading-days volume-weighted average price before the signing, underscores Siemens AG's commitment to a competitive and prudent investment strategy. Notably, Siemens AG will not extend new guarantees to Siemens Energy as part of the deal.

Siemens and Siemens Energy are collaboratively proposing to the board of Siemens India a demerger of the energy business, a move designed to streamline operations and enhance efficiency. This demerger is now slated to be completed in 2025, marking an earlier timeline than initially planned.

As of September 30, Siemens International and Siemens Metals collectively hold a 51% stake in Siemens India. Post-acquisition, Siemens AG's combined stake will surge to 69%, with Siemens Energy's stake decreasing from 24% to 6%.

In a parallel development, Siemens AG and Siemens Energy have reached agreements on indirect financial measures amounting to €1 billion. This provision aims to facilitate third parties in arranging guarantees for Siemens Energy, reinforcing its financial standing.

Siemens AG will allow Siemens Energy to leverage its 5% shareholding in Siemens India, valued at €750 million, as collateral for guarantees. In the event of the collateral being utilized, Siemens AG has committed to repurchasing up to 5% of shares in the Indian unit for the specified amount.

Furthermore, Siemens AG has granted payment deferrals, valued at €250 million and subject to market conditions. This sum will also be earmarked as collateral for guarantees, demonstrating Siemens AG's commitment to supporting Siemens Energy's business development and participation in the German energy transition.

Following the announcement, shares of Siemens India surged to the day's high, marking a 2.6% increase at 3,521.15. This uptrend aligns with the stock's overall growth trajectory, boasting a 25% increase in 2023.

Siemens AG's strategic investment and collaborative efforts with Siemens Energy signal a concerted push into the Indian market, positioning the conglomerate for a more influential role in the rapidly evolving energy sector. The accelerated demerger plans underscore a commitment to agility and responsiveness to market dynamics, setting the stage for a transformative period for Siemens India.

As of 2 pm, the shares of Siemens India were trading with gains of more than 2% at Rs 3,493 per share reacting to the news.