German industrial giant Siemens AG yesterday spun off its energy unit, raising just under 16 billion euros (US$18.61 billion), in one of the largest stock market debuts in Europe this year.
Shares in Siemens Energy AG traded at 22.01 euros at open, before sliding back to 19.91 euros at 7:13am GMT, lagging expectations.
Analysts had predicted the new company’s market cap to reach between 17 billion and 24 billion euros. In March, Siemens said that the energy unit had equity of about 17.3 billion euros.
Photo: EPA-EFE
“As an independent company, we now have the entrepreneurial flexibility we need to help shape the global transformation of the energy markets in a sustainable and economically successful manner,” Siemens Energy’s chief executive Christian Bruch said.
Despite the COVID-19 pandemic upending business plans worldwide, Siemens pressed ahead with the spin-off first announced in May last year.
Siemens Energy, with its oil and gas, turbines, power transmission and related services businesses, joins medical devices arm Siemens Healthineers AG and lightbulb unit Osram AG on the stock market, which debuted in 2018 and 2013 respectively, as Siemens slims down to become more agile.
Siemens chief executive Joe Kaeser in 2017 said that he wanted the company to become a “fleet of ships” rather than an awkward tanker, as it seeks to chart a course through a more challenging time for industrial companies.
Other sprawling German conglomerates such as Thyssenkrupp AG, Bayer AG and Continental AG have similarly spun off units to face a fast-changing trade climate, digitalization and cheaper metal imports from China.
The energy unit, which employs 91,000 people, has struggled in the past few years and last year announced 2,700 job cuts worldwide. It generated revenue of 28.8 billion euros in fiscal year 2019.
The conglomerate has proved broadly resilient to the pandemic, beating expectations with net profit of 539 million euros in the three months to the end of June.
As part of the spin-off, Siemens is to give 55 percent of shares in Siemens Energy to its shareholders at a ratio of one Siemens Energy share for every two shares in the main company. The company’s pension fund would receive 9.9 percent, with the parent company holding on to 35.1 percent.
Siemens intends to reduce its shareholding significantly within 12 to 18 months after the completion of the spin-off, it said.
In a peculiar quirk, the spin-off would temporarily raise Germany’s blue-chip stock index to 31 names from its normal 30. Siemens Energy will drop off the DAX after close.
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