Siemens Gamesa minority shareholders can wait for more

Christian Bruch is making little display of the charity that his first name implies. Siemens Energy’s chief executive is offering to buy minority investors in turbine maker Siemens Gamesa Renewable Energy at 18.05 euros per share, half the value of the shares at the beginning of last year. You can afford to pay more.

After a seemingly endless cycle of profit warnings, any exit could look tempting to Siemens Gamesa shareholders. The €12 billion company has €35 billion in orders, showing that demand for onshore and offshore wind turbines is red hot.

However, a catalog of production and supply chain problems since the pandemic means it is struggling to make money. Operating losses this year, the third in a row, are likely to exceed €500m, according to analyst forecasts compiled by Refinitiv. That’s a grim -5% margin.

With Siemens Energy shares also down by half since early last year thanks to his two-thirds ownership of Siemens Gamesa, Bruch has decided to act. Bringing in the struggling company will simplify a complicated corporate structure and allow management to focus on getting operations back on track. The collapse of Siemens Gamesa’s share price means that it will not have to pay gold for the privilege.

In total, the remaining third of the company will cost just over €4 billion, a fifth less than if it had launched in January at a similar premium. But offering less than the 20 euros per share at which Iberdrola sold two years ago may not sit well with some shareholders. In addition, Bruch benefits from annual savings of 300 million. Added to the 782 million operating profit forecast by Siemens Gamesa in 2025 and – after deducting 25% of the Spanish corporate tax – the operation should produce a good return of 10%.

It is true that the need to invest more money will erode that percentage. But with 2.5 billion euros of net liquidity, Bruch is not short of change. And although you only need 75% of the shares to exclude the company, the bar for absolute control is high. According to Spanish securities law, you need the agreement of 90% of the minority shareholders to carry out a full withdrawal. A pinch of Christian goodwill seems the easiest way to do it.