Siemens and Gamesa have announced the creation of what will be the world’s biggest wind farm manufacturing business, overtaking Vestas.
The German and Spanish companies are seeking to combine their respective strengths in offshore wind power and developing markets.
Siemens will take a 60 per cent stake in the company, said CEO Joe Kaeser.
In return for taking the leading role, Siemens will pay Gamesa’s shareholders, which include Spanish utility Iberdrola, $1.1bn in the form of an extraordinary dividend.
Gamesa will serve as the vehicle for the combined business, with the Spanish group creating new shares to be offered to Siemens.
A Siemens-Gamesa venture, months in the making, would overtake Denmark’s Vestas to become the world’s largest wind farm manufacturer by market share, operating in the mature North American and European markets and fast-growing markets such as India, Mexico and Brazil.
The signing of the merger is a “decisive milestone” which will allow both firms “to scale up and execute our growth strategy”, Kaiser said on a press call.
Final details still need to be approved after agreement in principle was reached, the Spanish company said in a statement on Friday following the suspension earlier of trading in Gamesa by the Spanish stock market regulator.
Siemens is dominant in the offshore wind market but relatively weak onshore. Gamesa is strong in emerging markets, notably Latin America, where it expanded when the Spanish government cut subsidies to clean energy producers in 2013.
Getting bigger should also help to lower costs, one of the industry’s key targets in its race for more efficient turbines, which in turn will make it more competitive compared to conventional sources of energy such as gas and coal.
Kaiser added that while wind power’s mid-term growth prospects are “modest” to 2020, there are “pockets of growth”, with double-digit growth rates expected for offshore wind and mid-to-high single-digit rates for onshore projects.
The two firms “plan to achieve industry-leading costs by sharing practices and complementary product lines,” he said. “We will leverage a combined installed base of 69 GW with our service footprint and offerings for mechanical and aerodynamic retrofits to help customers get costs down for renewable energy.”
He said there is a €230m “synergy potential” with the merger of the two companies.
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