German multinational corporation Siemens plans to complete the demerger of its Indian unit, Siemens Ltd, in 2025, which is significantly earlier than previously planned. To accelerate the demerger process, Siemens AG will acquire an 18% stake in Siemens Ltd India for a purchase price of €2.1 billion from Siemens Energy.
This acquisition will increase Siemens’ stake in the publicly listed Siemens Ltd India from 51% to 69%, while Siemens Energy’s stake will decrease from 24% to 6%. The intention behind this acquisition is to accelerate the unbundling of the business activities of the Indian subsidiary of Siemens, as stated by the company.
The demerger plan was initially put forward in 2020, but the separation of businesses in India was not feasible at the time. Following this acquisition, Siemens and Siemens Energy have agreed to propose a demerger of the energy business to the Board of Directors of Siemens Ltd India. Siemens Energy aims to ultimately acquire a controlling stake in the demerged energy business.
Siemens’ President and CEO, Roland Busch, stated that the accelerated demerger of Siemens Ltd India’s energy activities will further sharpen Siemens’ portfolio focus and strengthen its corporate structure in the fast-growing and strategically important Indian market.
The purchase price of €2.1 billion reflects a customary discount of 15% on the 5-trading-days volume-weighted average price before the day of signing. Additionally, Siemens has agreed to indirect financial measures totaling €1 billion to allow third parties to arrange guarantees for Siemens Energy.
Shares of Siemens Ltd rallied over 4% following the news, reaching a high of Rs 3,566.50 on the Bombay Stock Exchange (BSE).
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