Siemens AG will buy 18 percent stake in Siemens India for 2.1 billion euros at around Rs 3,380 per share, according to a report by CNBC TV-18. The stake will be bought from Siemens Energy.
Following the news, shares of Siemens also soared around 3 percent. At close, shares of Siemens settled 2.2 percent higher at Rs 3,495.70 on the NSE after hitting an intraday high of Rs 3,568.80.
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Siemens AG currently holds 47.7 percent stake in Siemens India while Siemens Energy owns 24 percent as per the company's shareholding data at the end of the September quarter. Post the deal, Siemens AG's stake in Siemens will increase to nearly 66 percent while that of Siemens Energy will come down to 6 percent. Siemens Energy is a subsidiary of Siemens AG.
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Siemens is the Indian joint venture between Siemens Energy and its parent Siemens AG. The decision to sell majority of its stake in the Indian joint venture to its parent by Siemens Energy was aimed to shore up its balance sheet and strengthen its capital base.
Siemens Energy has also proposed a demerger of the energy business of Siemens India. The firm also aims at acquiring a controlling stake in the demerged energy business.
Siemens Energy contributed 33 percent to the total topline of Siemens India with its EBIT contribution coming at 40 percent towards the consolidated business.
Brokerage firm Prabhudas Lilladher believes the corporate rejig through the demerger of the energy business will streamline Siemens India's domestic operations and give some headroom for valuations to play catch. The firm pegged a price target of Rs 4,900 for the stock, reflecting a massive upside potential of over 40 percent.
Bloomberg was the first to report Siemens Energy plans for a potential divestment in its Indian joint venture. News about the potential disposal comes amidst Siemens Energy's talks with the German government, banks and Siemens AG about seeking 15 billion euros in guarantees to safeguard big industrial projects.
Siemens AG also allows Siemens Energy to use its 5 percent stake as a collateral for guarantees which the former will buy out for 750 million euros if the latter choses to draw it out as collateral.
Also Read | Siemens Energy weighs sale of stake in Indian firm to Siemens
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