European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Siemens Gamesa Renewable Energy, S.A. / Event-Driven

Siemens Gamesa Renewable Energy, S.A. (SGRE SM)

<ul>
<li>Q3 2022 results were received as weak by the market. Guidance was (again) revised downwards. Otherwise, the takeover bid continues in the process of authorization by the CNMV.</li>
<li>I don't expect any relevant changes in the offer: Siemens Energy already has control, operating problems persist and the financial position continues to deteriorate. Downwards risks to consensus estimates persist.</li>
<li>Gross spread is 0.33%. The estimated annual return is 1.63% (assuming settlement on 24 October). Sell on strength/tender during the offer in case there's a (low probability) improvement in the offer.</li>
</ul>


Q3 2022 results were received as weak by the market. Guidance was (again) revised downwards. Otherwise, the takeover bid continues in the process of authorization by the CNMV.
I don't expect any relevant changes in the offer: Siemens Energy already has control, operating problems persist and the financial position continues to deteriorate. Downwards risks to consensus estimates persist.
Gross spread is 0.33%. The estimated annual return is 1.63% (assuming settlement on 24 October). Sell on strength/tender during the offer in case there's a (low probability) improvement in the offer.


Siemens Energy/Siemens Gamesa: Downwards Guidance

<ul>
<li>Siemens Energy seems to have the backing of both BlackRock and Norges, and could then count on 72.55% of the votes vs. 75% approval at EGM needed for delisting.</li>
<li>The shares have seen high purchasing activity since the offer announcement (€158 million average turnover since Monday). Gross spread is 1.5%, 3.7% estimated annual return (assuming settlement on 24 October).</li>
<li>One could sell part of the shares if the share price rises above the offer price and await a possible sweetening, and tender the rest during the acceptance period.</li>
</ul>


Siemens Energy seems to have the backing of both BlackRock and Norges, and could then count on 72.55% of the votes vs. 75% approval at EGM needed for delisting.
The shares have seen high purchasing activity since the offer announcement (€158 million average turnover since Monday). Gross spread is 1.5%, 3.7% estimated annual return (assuming settlement on 24 October).
One could sell part of the shares if the share price rises above the offer price and await a possible sweetening, and tender the rest during the acceptance period.


<ul>
<li>Siemens Energy hasn't expected to its CMD and instead announced on Saturday late evening an <strong>€18.05/share</strong> voluntary cash tender offer for the remaining 32.9% of Siemens Gamesa it doesn't own.</li>
<li>The consideration represents a 27.7% premium and 23.1x EV/Fwd EBITDA. It seems fair and higher than that initially expected. Siemens Energy is likely to issue a convertible.</li>
<li>Upon market open on 23 May, expect the shares to close most of the gap with the offer price. Siemens Gamesa will likely exit the Ibex 35 in H2 2022.</li>
</ul>


Siemens Energy hasn't expected to its CMD and instead announced on Saturday late evening an €18.05/share voluntary cash tender offer for the remaining 32.9% of Siemens Gamesa it doesn't own.
The consideration represents a 27.7% premium and 23.1x EV/Fwd EBITDA. It seems fair and higher than that initially expected. Siemens Energy is likely to issue a convertible.
Upon market open on 23 May, expect the shares to close most of the gap with the offer price. Siemens Gamesa will likely exit the Ibex 35 in H2 2022.


<ul>
<li>Siemens Energy is considering a cash offer for the 32.9% of Siemens Gamesa it does not own. Group simplification and major restructuring would make sense.</li>
<li>Applying the 6-month VWAP rule, the offer price could reach c. <strong>€18.1/share</strong>. Takeover regulation says the offer must be in cash and the price equitable, allowing for other calculation methods.</li>
<li>Siemens Energy does not need to offer a high premium and could make an announcement on 24 May (CMD). Recommendation is long.</li>
</ul>


Siemens Energy is considering a cash offer for the 32.9% of Siemens Gamesa it does not own. Group simplification and major restructuring would make sense.
Applying the 6-month VWAP rule, the offer price could reach c. €18.1/share. Takeover regulation says the offer must be in cash and the price equitable, allowing for other calculation methods.
Siemens Energy does not need to offer a high premium and could make an announcement on 24 May (CMD). Recommendation is long.


Siemens Energy/Siemens Gamesa: Possible Delisting Offer

<ul>
<li>Investors are pressing Siemens Energy (67% owner of <a href="https://www.smartkarma.com/entities/siemens-gamesa-renewable-energy-s-a" target="_blank" data-smartkarma-citation="entities:21270:1" rel="noopener">Siemens Gamesa Renewable Energy, S.A. (SGRE SM)</a>)  to act in the wake of a downwards sliding share price.</li>
<li>DFC valuation (WACC 7.5%, 5y EV/EBITDA exit multiple of 5.5x, which conservatively implies no growth rate, which I consider adequate in a low visibility environment) gives a fair value of €16.4/share. </li>
<li>An exclusion bid could be on the cards, and the premium need not be high, 20% could be enough, but that would still amount to c. €3.7 billion.</li>
</ul>


Investors are pressing Siemens Energy (67% owner of Siemens Gamesa Renewable Energy, S.A. (SGRE SM))  to act in the wake of a downwards sliding share price.
DFC valuation (WACC 7.5%, 5y EV/EBITDA exit multiple of 5.5x, which conservatively implies no growth rate, which I consider adequate in a low visibility environment) gives a fair value of €16.4/share. 
An exclusion bid could be on the cards, and the premium need not be high, 20% could be enough, but that would still amount to c. €3.7 billion.


Siemens Energy/Siemens Gamesa: Takeover Conundrum

Spain

Siemens Gamesa Renewable Energy, S.A. designs and manufactures renewable energy equipment. The Company offers wind turbines, turbine gearboxes, offgrid, and other related equipment, as well as provides maintenance and reconditioning services. Siemens Gamesa Renewable Energy serves industrial facility management, automotive industry, and new technology development worldwide.

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Siemens Gamesa Renewable Energy, S.A. (SGRE SM)

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Siemens Energy/Siemens Gamesa: Takeover Conundrum

Union Investment is demanding Siemens Energy to launch a delisting takeover bid on the 33% of the Siemens Gamesa share capital that it does not...

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