Siemens, Gamesa Near Wind-Power Deal

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Wind turbines manufactured by Gamesa. Siemens and Gamesa in February agreed in principle to combine their wind activities. ENLARGE
Wind turbines manufactured by Gamesa. Siemens and Gamesa in February agreed in principle to combine their wind activities. Photo: Bloomberg News

FRANKFURT—Siemens AG and Gamesa Corporacion Tecnologica SA are close to announcing an anticipated deal to combine their wind-power activities and create the world’s largest wind turbine maker, according to people familiar with the matter.

A deal, which could be announced as early as this week according to the people, would end months of the uncertainty around the transaction. As always in these deals, an announcement could be delayed.

Siemens and Gamesa in February agreed in principle to combine their wind activities but the tie-up hit a snag because Gamesa needed to renegotiate elements of an offshore wind joint venture, dubbed Adwen, with French nuclear engineering firm Areva SA.

Those issues have been resolved in principle, the people said.

The deal structure that is to be revealed as early as Wednesday foresees Siemens transferring its offshore wind activities into the Spanish company in exchange for a roughly 60% stake in the enlarged business, people familiar with the matter said, adding that the combination could help realize annual savings of around €200 million ($224.13 million).

The expanded entity would likely have a market capitalization of roughly €10 billion, remain listed on the Madrid Stock Exchange and be led by Gamesa’s Chairman Ignacio Martin, the people said.

The transaction still needs to be approved by Gamesa’s shareholders, who will get to vote on the transaction.

Both Siemens and Gamesa declined to comment.

Combining Siemens’ offshore wind activities with Gamesa’s onshore operations would create a new global market leader by capacity, ahead of China’s Xinjiang Goldwind Science & Technology Co., Denmark’s Vestas A/S and General Electric Co., according to FTI Consulting.

Together, both companies could reap juicy synergies from bundling research and development as well as distribution efforts, FTI said.

The wind operations of Siemens and Gamesa are complementary. Siemens is one of the world’s biggest makers of offshore wind turbines, while Gamesa is the world’s fourth-largest onshore manufacturer with a strong foothold in emerging markets like India and Latin America, according to its website.

The creation of a new wind champion has been held up for the past couple of months because of uncertainty around Adwen. That uncertainty has been removed. According to the agreement, Areva can either sell its 50% stake in the joint venture to a combined Siemens/Gamesa wind unit or another suitor which could snap up Adwen entirely, people familiar with the matter said.

Siemens and Gamesa will likely seek a potential buyer for Adwen as part of that agreement, these people said, adding Adwen would be integrated into the combined wind activities if no buyer is found.

Eyk Henning at eyk.henning@wsj.com



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