Siemens AG, Europe’s biggest engineering company, will pay about $1 billion of cash to Spain’s Gamesa Corp. Tecnologica SA as part of a deal to combine the companies’ wind power businesses, according to people familiar with the matter.
Gamesa will receive the cash as a special dividend from the new wind venture as well as a 41 percent stake in the business, with Siemens holding 59 percent, said the people, who asked not to be identified because talks are private.
Gamesa shares were suspended Friday after the company said in a regulatory filing it has approvals for the potential integration of its wind power business with Siemens, although the final terms still need to be agreed upon. Siemens shares rose 1.4 percent to 92.19 euros at 9:07 a.m. in Frankfurt.
An agreement would end months of back and forth on the transaction. Gamesa, based in Zamudio, Spain, said on Jan. 29 it was in negotiations to combine its operations with Siemens, a move that would create one of the world’s largest wind-turbine makers. The new venture could have a market capitalization of about 10 billion euros ($11 billion), the people said.
The Spanish company’s network of installed turbines is attractive to Siemens, which has been trying to expand revenue from service contracts. The German engineering firm leads in machines designed for offshore use, while Gamesa specializes in onshore wind.
Siemens has a market value of about 77 billion euros while Gamesa is currently valued at 4.8 billion euros.
Representatives for Gamesa and Siemens declined to comment. The Wall Street Journal reported on Wednesday that the companies were close to an agreement.
©2016 Bloomberg News
Lead image credit: Gamesa.