German industrial giant Siemens on Monday spun off its energy unit, raising just under €16 billion, in one of the largest stock market debuts in Europe this year.
Shares in Siemens Energy traded at €22.01 at open before sliding back to €19.91 at 07.13 GMT, lagging expectations.
Analysts had predicted the new company’s market cap to reach between €17 and €24 billion. In March, Siemens said the energy unit had equity of about €17.3 billion.
“As an independent company, we now have the entrepreneurial flexibility we need to help shape the global transformation of the energy markets in a sustainable and economically successful manner,” said Siemens Energy’s chief executive Christian Bruch.
Despite the coronavirus pandemic upending business plans worldwide, Siemens pressed ahead with the spinoff first announced in May 2019.
Siemens Energy, with its oil and gas, turbines, power transmission and related services businesses, joins medical devices arm Healthineers and lightbulb unit Osram on the stock market, which debuted in 2018 and 2013 respectively, as Siemens slims down to become more agile.
Siemens chief executive Joe Kaeser in 2017 said he wanted the company to become a “fleet of ships” rather than an awkward tanker, as it seeks to chart a course through a more challenging time for industrial companies.
Siemens chief executive Joe Kaeser in 2017 said he wanted the company to become a ‘fleet of ships’ rather than an awkward tanker
Other sprawling German conglomerates such as Thyssenkrupp, Bayer and Continental have similarly spun off units to face a fast-changing trade climate, digitalisation, and cheaper metal imports from China.
The energy unit, which employs 91,000 people, has struggled in recent years and last year announced 2,700 job cuts worldwide. It generated revenue of €28.8 billion in fiscal year 2019.
The conglomerate has, however, proved broadly resilient to the coronavirus pandemic, beating expectations with net profit of €539 million in the three months to the end of June.
As part of the spinoff, Siemens will give 55 per cent of shares in Siemens Energy to its current shareholders at a ratio of one Siemens Energy share for every two shares in the main company.
The company’s pension fund will get 9.9 per cent, with the parent company holding on to 35.1 per cent.
Siemens intends to reduce its shareholding significantly within 12 to 18 months after the completion of the spinoff, it said.
In a peculiar quirk, the spinoff will temporarily raise Germany’s blue-chip stock index to 31 names from its normal 30. Siemens Energy will drop off the DAX after close.