Siemens and Gamesa Come Together to Create Global Wind Energy Giant

Siemens and Gamesa Come Together to Create Global Wind Energy Giant

The merger between Siemens and Gamesa announced last Friday, to create windfarms, with the former paying 1 billion euros ($1.13 billion) for a 59% in the combined business would propel growth of Indian market, says Ramesh Kymal, Managing director, Gamesa India.

From a strategic rationale standpoint, the deal is “extremely compelling,” offering attractive terms for Gamesa and the means for Siemens to expand in wind power, Bloomberg reported quoting Kepler analyst William Mackie wrote in a note Monday. Siemens and Gamesa have identified cost cuts of 230 million euros within four years, and while the product synergies “are clear,” achieving that target remains a risk, Morgan Stanley analyst Ben Uglow said in a note.

Kymal of Gamesa also added that the marriage would be mutually beneficial to both the companies – as Gamesa, which is strong in its onshore presence, would complement Siemens’ offshore presence. “We believe the merger will have a positive impact on India. We are looking for an increase in tech imports, leveraging Siemens’ strength and as a bigger company, our balance sheet would be bigger. It would also help our faster growth in the Indian market,” he said.

Under the terms of the combination, Siemens will own 59 percent of the new business, leaving Gamesa with 41 percent and a 1 billion-euro cash payment for its assets. While Siemens does not have a big presence in India in the wind energy space where it made a late entry, this merger would increase its hold. With Gamesa’s market share of 29% and 1003 MW installed for the 2015-16 fiscal, the newly merged company looks to increase growth across the renewable energy space.

According to recent figures by Navigant Research, Siemens and Gamesa were the fourth and fifth wind turbine suppliers in the world, with 7.7% and 5.5% respectively.

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