Siemens jumps 6% on plans to spin-off energy business

Siemens Ltd stock surged 8.6 percent during the trade on December 18 after the board of directors authorised the management to begin the first steps required to examine a potential demerger of the company’s energy business.

The move came after promoters requested the board to consider hive off the energy business into a separate entity.

Siemens’ shares settled at Rs 4,138.05 on the National Stock Exchange, up 5.91 percent from the closing price of the previous session.

“Further, the BoD (board of directors) has approved the immediate incorporation of a wholly owned subsidiary, on the basis that the subsidiary may be required if and when the board decides to implement the aforesaid demerger,” said Siemens, in a filing with the exchanges.

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On December 18, Siemens Ltd was among Jefferies India’s top picks from the industrial sector. The others included Larsen & Toubro Ltd, Thermax, and KEI Industries Ltd. The selections are based on strong order flows observed in the second quarter.

Germany’s Siemens has announced that it will acquire an additional 18 percent stake in Siemens India at Rs 2,952.86 a share from Siemens Energy on or after December 8. The transaction price is at a 21 percent discount to Siemens India’s closing price of Rs 3,753.10 on December 1.

Subject to the completion of the deal, the parent’s stake in Siemens India will rise to around 69 percent. Siemens Energy’s stake in Siemens India will fall to 6 percent.

The price at which the stake has been transferred, in isolation, will have no bearing on the share price. “The energy business, once demerged, is expected to garner incremental focus as Siemens Energy moves to own controlling stakes,” Nirav Karkera, head of research at online trading platform Fisdom said.

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