Siemens AG today announced key information on the proposed energy spin-off and invited shareholders to the extraordinary General Meeting to be held on July 9, 2020. Siemens is building an independently operated, world-leading energy company, and the release of the separation report marks another milestone in this process.
Siemens AG today announced key information on the proposed energy spin-off and invited shareholders to the extraordinary General Meeting to be held on July 9, 2020. Siemens is building an independently operated, world-leading energy company, and the release of the separation report marks another milestone in this process. Siemens shareholders will automatically receive one share for every two Siemens Energy AG shares. 55% of Siemens Energy shares will be distributed to Siemens shareholders. Subject to the strategic and operational developments of both companies, Siemens AG intends to further significantly reduce its shareholding in Siemens Energy within 12 to 18 months of the effective date of the demerger. In addition, Siemens will fulfill its obligations under the agreement to avoid exerting a controlling influence on the operations of the new company in the future. According to the plan, the demerger will be implemented by the end of September 2020, and the demerger plan is still subject to approval by the extraordinary general meeting. Shares of the new company will be issued for the first time on September 28, 2020.
"Establishing the Siemens Energy business as a stand-alone company is a key milestone in the successful advancement of our Vision 2020+ strategy." Joe Kaeser, President and Chief Executive Officer of Siemens AG, said: "The significant value added to the Siemens Healthcare business fully demonstrates that we are able to unlock the significant growth potential of our business by intensifying our focus. This applies both to Siemens Energy and to the 'new Siemens AG', which focuses on other physical industrial businesses. By advancing this transformation, we are preparing our companies for the massive technological changes that we expect in the future. We have now reached a major milestone in our transformation."
An international company with a unique presence in the energy sector
Through the planned public listing, Siemens Energy will emerge as a strong and focused international company with operations across the entire energy value chain, including services. Thanks to its unique business layout, Siemens Energy is able to respond quickly to customer needs, helping to meet the world's growing energy demand while significantly reducing carbon emissions. In the future, Siemens AG will focus on digital industry, smart infrastructure and the Siemens Transportation business. The company's medical technology business - Siemens Healthcare focuses on imaging diagnostics, clinical diagnostics, laboratory diagnostics, molecular medicine and medical services. Siemens Healthcare was publicly listed as an independently operated company in March 2018.
As of March 31, 2020, the new Siemens Energy has approximately 91,000 employees worldwide. Its product portfolio will include combined cycle units, generators, transformers and compressors. In the field of wind turbines, with its 67 percent stake in Siemens Gamesa Renewable Energy, Siemens Energy will become a global leader in renewable energy. As of September 30, 2019, Siemens Energy's reserve order book amounted to 77 billion euros. According to the consolidated financial statements of Siemens Energy AG for the year ended September 30, 2019, prepared on a voluntary basis, Siemens Energy generated revenues of approximately 29 billion euros in the 2019 fiscal year. Excluding severance charges of about 300 million euros, adjusted earnings before interest, tax and amortization (EBITA) would have been about 1.3 billion euros.
Siemens Energy Investment rating target setting
Siemens Energy will be on a solid financial footing from the outset: the new company will have substantial capital and liquidity at its disposal from the outset. The goal is to meet the requirements for a solid investment rating. According to the consolidated financial statements of Siemens Energy AG for the year ended 31 March 2020, prepared on a voluntary basis, its share capital totalled approximately €17.3 billion (under IFRS), equivalent to a shareholders' equity ratio of 37.8%. Siemens Energy has secured liquidity equivalent to €6.2 billion, of which approximately €4.1 billion will be used to settle debt incurred prior to the spin-off. In addition, a consortium of banks has confirmed a revolving credit line of €3 billion.
Strong strategic and financial strength
"Siemens Energy has strong operational and strategic as well as financial strengths." Ralf P. Thomas, Chief Financial Officer of Siemens AG, said: "Siemens Energy will actively pursue its own strategic operations independently of Siemens AG, ensuring independent financing in the market. The separation will allow our shareholders to benefit directly from the future success of the new company. At the same time, we are confident that the 'diversification discount effect' on Siemens AG shares will be reduced."
"Global energy markets are undergoing fundamental change." Christian Bruch, CEO of Siemens Energy AG, added: "The global demand for affordable and reliable energy continues to grow. Today, some 850 million people still lack access to electricity. While demand continues to grow, we need to significantly reduce carbon emissions. This is a challenge, but it is also an opportunity. We are building Siemens Energy into an integrated energy company that provides support and solutions to customers at all stages of the value chain."
The agreement guarantees the operational independence of the new company
Siemens Energy will operate independently after the separation, and its independent status is assured by the separation agreement with Siemens AG. Under the agreement, Siemens AG is obliged to refrain from exerting any direct or indirect controlling influence over the new company. In addition, the agreement requires that no more than three representatives from Siemens AG be represented on the Supervisory Board of Siemens Energy AG. In addition, their voting rights will be limited to ensure that no resolution can be unilaterally implemented against the wishes of the other shareholders of Siemens Energy AG on specific issues, in particular for the election of members of the Supervisory Board.
