Dive Brief:
- European engineering giant Siemens will merge its wind business with Spain-based Gamesa, reportedly paying more than $1 billion for a majority stake in what will be the world's largest wind development company, Bloomberg reports.
- Siemens will hold 59% of the combined entity, with existing Gamesa shareholders retaining the rest.
- To simplify the merger, Gamesa has taken steps to end a joint venture with France-based energy company Areva, allowing the company several months to either sell its share or buy the entire venture.
Dive Insight:
Officials at Siemens say the two businesses are "highly complementary with regard to markets, products and technology," giving the combined company a leg up in both mature markets as well as emerging wind production centers.
"The combination of our wind business with Gamesa follows a clear and compelling industrial logic in an attractive growth industry, in which scale is a key to making renewable energy more cost-effective," Siemens AG. President and CEO Joe Kaeser said in a statement. "With this business combination, we can provide even greater opportunities to the customers and value to the shareholders of the new company.
Kaeser said the deal "underlines our commitment to affordable, reliable and sustainable energy supply."
Reuters reports the two companies began talks in January, but the wind merger stalled because of a joint venture between Areva and Gamesa, called Adwen. To simplify the merger, Gamesa granted Areva three months to either buy out the joint venture or sell it.
The new company will have a a 69 GW installed base worldwide, and an order backlog of around €20 billion or roughly $22,683,500,000 in U.S. dollars. Annual revenues will exceed €9 billion ($10,207,575,000). At this time, the U.S. dollar traded $1.13 to one euro.
Siemens said the combined business will stretch "across all important regions, and manufacturing footprints in all continents." Siemens' wind power business currently has a foothold in North America and Northern Europe, while Gamesa is focused on fast-growing emerging markets, such as India and Latin America.
Global offshore wind set an installation record in 2015, upping its 1,069 MW performance in 2014 to at least 3,996 MW. Cumulative global capacity is now more than 11,800 MW, and on track to reach as much as 47,000 MW by 2020, according to the Department of Energy. While Europe has been the leading global developer of wind energy thus far, markets in Asia, specifically China, have started taken off.
