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Merger Forms World’s Biggest Wind-Turbine Maker
World Economy

Merger Forms World’s Biggest Wind-Turbine Maker

Siemens AG and Gamesa Corp. Tecnologica SA agreed to combine their wind-turbine manufacturing businesses, creating a company that will dominate the industry and speed up consolidation triggered by competition and price pressures.
Europe’s largest engineering company will own 59% of the capital of the new business, Gamesa said in a statement on its website Friday. Gamesa, based in Zamudio, Spain, gets 41% and a €1 billion ($1.1 billion) cash payment of €3.75 a share from Siemens. That represents 26% of Gamesa’s share price on Jan. 28 before the two disclosed their negotiations, Bloomberg reported.
Together, the two would have about 69 gigawatts of turbines installed worldwide, putting them in a position to surpass Vestas Wind Systems A/S and General Electric Co. While worldwide clean-energy installations have hit successive records in recent years, a boom in manufacturing capacity and improvements in the technology have narrowed margins for making the machines. Companies are having to compete on a global scale, with Xinjiang Goldwind Science & Technology Co. of China taking the biggest market share last year.
Gamesa shares jumped 5.6% in Madrid, giving it a market value of €5 billion. Siemens rose 0.6% in Frankfurt trading. Vestas rose 3.6% in Copenhagen, partly because it won what could be its biggest-ever order.
The equity value of the wind businesses of Gamesa and Siemens would be €4 billion and €5.8 billion respectively, based on the market price of the Gamesa shares on Jan. 28 and an agreed exchange ratio, Gamesa said in a filing. That would give a combined equity value of €9.8 billion.
The two have identified cost savings of €230 million that will be made within the next four years as a result of the deal. The combined company will have an order backlog of €20 billion, annual revenue of €9.3 billion and earnings before interest and taxes of €839 million. It will be based and listed in Spain, though the headquarters of the offshore-wind unit will be in Hamburg and Vejle, Denmark.
The combination will roil the rankings of the top wind turbine makers, which already were upset by the emergence of Goldwind as the top supplier by market share last year. The Chinese manufacturer pushed past western rivals led by Vestas and GE. By market share, Siemens and Gamesa each had 5.3% of installations last year, according to Bloomberg New Energy Finance data. Their combined 10.6% share would rank the new entity third behind Goldwind and Vestas.

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