Siemens spin-off, possible market value of above $20 billion

Siemens expects its spin-off Siemens Energy to reach a market value of above 17 billion Euros ($19.98 billion) when it hits the Frankfurt stock exchange, a source familiar with the matter said.

According to the source, the consensus forecast for the value of the business unit of gas and wind turbines is between 21 and 22 billion euros. Based on the number of shares of Siemens Energy the company would have a share price of 28.90 – 30.28 euros per share.

Siemens has declined to officially comment on the matter.

While there are many expectations about the spinoff, its success can only be estimated after two to three months. High price volatility is also expected after the company makes its stock market debut on September 28.

Siemens is selling off its energy business due to a huge decline in demand and unfavorable new energy policies. The company will focus on its factory automation, mobility, and smart buildings business. It will give 55% of the shares in the unit to shareholders at a ratio of 1:2, that is, one share for every two Siemens shares. Also, Siemen’s AG will retain a direct stake of 35.1%, while Siemen’s pension fund will receive 9.9%. Siemens will retain a stake of roughly 25% in Siemens Energy to prevent third party interference and allow a smooth transition.

Over the next 12 to 18 months after the listing, Siemens will reduce its stake before it eventually exits.

Shareholders will be able to prevent key corporate decisions at general meetings through a blocking minority of 25% plus one share which can be held for a minimum of five years.

Siemens Energy employs 91,000 people. It includes a range of products from generators and transformers to combines cycle turbines and compressors. The company will also include wind energy via its majority stake in Siemens Gamesa Renewable Energy.