Siemens demerger: What the investors need to know
German MNC Siemens has announced plans to complete the demerger of its Indian unit Siemens Ltd in 2025, earlier than previously planned. To accelerate the demerger, Siemens AG will acquire an 18% stake in Siemens Ltd India from Siemens Energy for €2.1 billion. Renu Baid, V-P Research, IIFL Institutional Equities, what this will mean for Siemens India.
Help us understand how this construct actually stands out for Siemens?
If you look at the Siemens India business today, it includes Siemens Energy, which is a separately identified segment and the rest of the other businesses. While Siemens Energy globally got listed, in India, the energy vertical or the gas and power vertical continued to remain a part of the listed entity against which 24% equity stake of the listed company was given to Siemens Energy and 51% was retained by Siemens AG.
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So given the current state of affairs at Siemens Energy globally, which is in a cash trap situation, they have made two layers of announcements. First, they will be selling 18% of their holding in the listed company to Siemens AG. It will be more of an inter-promoter group entity transaction, not much coming on the open market. At 15% discount to the price, whatever has been arranged has been finalized based on the requirements of the exchanges and CV there.
Second, what they have announced is there would be a demerger of Siemens India business, essentially into gas and power, which is the energy vertical and the rest of the other
