European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

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

<ul>
<li>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.</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. €18.1/share. 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

<div>
On 18 May, economic daily Expansion said that <a href="https://www.smartkarma.com/entities/siemens-ag" target="_blank" data-smartkarma-citation="entities:21713:1" rel="noopener">Siemens AG (SIE GR)</a> was planning to launch a delisting bid for <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>.
The CNMV (National Securities Market Commission, the Spanish market watchdog) suspended Siemens Gamesa trading shortly after 9 a.m. and until 2:30 p.m. and asked Siemens to clarify whether it will launch an exclusion takeover bid for Gamesa.
<ul>
<li>Siemens Energy (ENR GR) explained in a note to the CNMV that it was conducting a "strategic review" of its entire portfolio of assets, and that Siemens Energy was not "currently" working on a delisting bid, although it acknowledged that it had hired external advisers for the strategic review.</li>
<li>Siemens Gamesa's shares resumed trading and closed at €26.52, far from the €38.48 reached on 7 January (historical high).</li>
</ul>
Siemens Gamesa needs to step up changes to adapt to a rapidly evolving wind energy sector. Although Siemens Energy has control of the group's management, by holding the majority of Siemens Gamesa's capital, having 100% would give it total freedom to accelerate change.
There have already been some rumours of a possible takeover bid, the last one in December 2020, when it was discussed the interest of large Asian groups such as Shanghai Electric, and the Japanese conglomerate Mitsubishi, according to Expansion. These two companies reportedly approached Siemens in recent months to discuss the purchase of some Siemens Gamesa assets.
</div>
<div>
Siemens is already undergoing a deep business transformation and cost adjustment. Current prices (estimated multiples of 25.0x and 15.6x EV/EBITDA 2021e and 2022e respectively) already discount a scenario of strong growth and leave little room for pressure from higher supply costs or increased competition.
Siemens paid €20 per share (24% less than the current price) for the 8% it bought from Iberdrola in February 2020, and would not presumably be wiling to pay a high bid premium in case it decided to launch a bid for Siemens Gamesa. At current market prices (without assuming any premium), the amount of the possible takeover bid would amount to c. €5,900 mn euros (32.8% of the capitalization of Siemens Energy and 5.3% that of Siemens).
The stake in Siemens Gamesa represents c. 67.6% of the market cap of Siemens Energy. Siemens Gamesa provides about half of Siemens Energy's EBIT, which suggests that the other businesses of Siemens Energy are undervalued. Siemens Energy is 46.07% owned by Siemens.
I value Siemens Gamesa using a DCF model. My TP is €30.3/share, a 14.3% premium to the closing price on 18 May. Although I am positive on Siemens Gamesa, I do not believe that Siemens will launch a bid anytime soon.
</div>


On 18 May, economic daily Expansion said that Siemens AG (SIE GR) was planning to launch a delisting bid for Siemens Gamesa Renewable Energy, S.A. (SGRE SM).
The CNMV (National Securities Market Commission, the Spanish market watchdog) suspended Siemens Gamesa trading shortly after 9 a.m. and until 2:30 p.m. and asked Siemens to clarify whether it will launch an exclusion takeover bid for Gamesa.

Siemens Energy (ENR GR) explained in a note to the CNMV that it was conducting a "strategic review" of its entire portfolio of assets, and that Siemens Energy was not "currently" working on a delisting bid, although it acknowledged that it had hired external advisers for the strategic review.
Siemens Gamesa's shares resumed trading and closed at €26.52, far from the €38.48 reached on 7 January (historical high).

Siemens Gamesa needs to step up changes to adapt to a rapidly evolving wind energy sector. Although Siemens Energy has control of the group's management, by holding the majority of Siemens Gamesa's capital, having 100% would give it total freedom to accelerate change.
There have already been some rumours of a possible takeover bid, the last one in December 2020, when it was discussed the interest of large Asian groups such as Shanghai Electric, and the Japanese conglomerate Mitsubishi, according to Expansion. These two companies reportedly approached Siemens in recent months to discuss the purchase of some Siemens Gamesa assets.


Siemens is already undergoing a deep business transformation and cost adjustment. Current prices (estimated multiples of 25.0x and 15.6x EV/EBITDA 2021e and 2022e respectively) already discount a scenario of strong growth and leave little room for pressure from higher supply costs or increased competition.
Siemens paid €20 per share (24% less than the current price) for the 8% it bought from Iberdrola in February 2020, and would not presumably be wiling to pay a high bid premium in case it decided to launch a bid for Siemens Gamesa. At current market prices (without assuming any premium), the amount of the possible takeover bid would amount to c. €5,900 mn euros (32.8% of the capitalization of Siemens Energy and 5.3% that of Siemens).
The stake in Siemens Gamesa represents c. 67.6% of the market cap of Siemens Energy. Siemens Gamesa provides about half of Siemens Energy's EBIT, which suggests that the other businesses of Siemens Energy are undervalued. Siemens Energy is 46.07% owned by Siemens.
I value Siemens Gamesa using a DCF model. My TP is €30.3/share, a 14.3% premium to the closing price on 18 May. Although I am positive on Siemens Gamesa, I do not believe that Siemens will launch a bid anytime soon.


Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Earlier today, S&amp;P Dow Jones announced that all the proposals of the latest market consultation would be implemented at the close of trading on 16 April to reduce constituent concentration, ease liquidity limitations, and improve index replication further than would have been achieved from the result of the prior market consultation.We expect there will be 37 additions to the index taking the number of index constituents up to 67. This number will increase over the next few rebalances as the target is to get up to at least 100 constituent stocks.With index weight dependent on free float market cap and turnover, plus capping of index weight dependent on exposure scores, this is going to be a large rebalance. We expect a one-way turnover of 48.1% with our expected changes.Stocks that could see passive buying (sorted in terms of days of ADV) are <a href="https://www.smartkarma.com/entities/drax-group-plc" target="_blank" data-smartkarma-citation="entities:21911:1" rel="noopener">Drax Group PLC (DRX LN)</a>, <a href="https://www.smartkarma.com/entities/enel-americas-sa-c3a67f8a-ad13-45ff-a676-cbc513b8c458" target="_blank" data-smartkarma-citation="entities:25965:1" rel="noopener">Enel Americas Sa (ENIA US)</a>, <a href="https://www.smartkarma.com/entities/fortum-oyj" target="_blank" data-smartkarma-citation="entities:21762:1" rel="noopener">Fortum OYJ (FUM1V FH)</a>, <a href="https://www.smartkarma.com/entities/erg-spa" target="_blank" data-smartkarma-citation="entities:21186:1" rel="noopener">ERG SpA (ERG IM)</a>, <a href="https://www.smartkarma.com/entities/terna-rete-elettrica-nazionale" target="_blank" data-smartkarma-citation="entities:21232:1" rel="noopener">Terna Rete Elettrica Nazionale (TRN IM)</a>, <a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power Group Corp (916 HK)</a>, <a href="https://www.smartkarma.com/entities/nordex-se" target="_blank" data-smartkarma-citation="entities:21682:1" rel="noopener">Nordex SE (NDX1 GR)</a>, <a href="https://www.smartkarma.com/entities/acciona-sa" target="_blank" data-smartkarma-citation="entities:21248:1" rel="noopener">Acciona SA (ANA SM)</a>, <a href="https://www.smartkarma.com/entities/avista-corp" target="_blank" data-smartkarma-citation="entities:17178:1" rel="noopener">Avista Corp (AVA US)</a> and <a href="https://www.smartkarma.com/entities/idacorp-inc" target="_blank" data-smartkarma-citation="entities:15190:1" rel="noopener">Idacorp Inc (IDA US)</a>.Stocks that could see passive selling (sorted in terms of days of ADV) are <a href="https://www.smartkarma.com/entities/meridian-ener-partly-paid-sh" target="_blank" data-smartkarma-citation="entities:4327:1" rel="noopener">Meridian Energy (MEL NZ)</a>, <a href="https://www.smartkarma.com/entities/contact-energy-ltd" target="_blank" data-smartkarma-citation="entities:13136:1" rel="noopener">Contact Energy (CEN NZ)</a>, <a href="https://www.smartkarma.com/entities/verbund-ag" target="_blank" data-smartkarma-citation="entities:22563:1" rel="noopener">Verbund AG (VER AV)</a>, <a href="https://www.smartkarma.com/entities/edp-renovaveis-sa" target="_blank" data-smartkarma-citation="entities:21363:1" rel="noopener">EDP Renovaveis SA (EDPR PL)</a>, <a href="https://www.smartkarma.com/entities/scatec-solar-asa" target="_blank" data-smartkarma-citation="entities:25120:1" rel="noopener">Scatec Solar ASA (SSO NO)</a>, <a href="https://www.smartkarma.com/entities/innergex-renewable-energy-inc" target="_blank" data-smartkarma-citation="entities:25479:1" rel="noopener">Innergex Renewable Energy (INE CN)</a>, <a href="https://www.smartkarma.com/entities/boralex-inc" target="_blank" data-smartkarma-citation="entities:25478:1" rel="noopener">Boralex Inc (BLX CN)</a> and <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>.Among existing constituents, there will be passive inflows on <a href="https://www.smartkarma.com/entities/orsted-a-s" target="_blank" data-smartkarma-citation="entities:24765:1" rel="noopener">Orsted A/S (ORSTED DC)</a>, <a href="https://www.smartkarma.com/entities/vestas-wind-systems-a-s" target="_blank" data-smartkarma-citation="entities:22524:1" rel="noopener">Vestas Wind Systems A/S (VWS DC)</a>, <a href="https://www.smartkarma.com/entities/solaredge-technologies-inc" target="_blank" data-smartkarma-citation="entities:27981:1" rel="noopener">SolarEdge Technologies Inc (SEDG US)</a>, <a href="https://www.smartkarma.com/entities/sunrun-inc" target="_blank" data-smartkarma-citation="entities:19726:1" rel="noopener">Sunrun Inc (RUN US)</a> and <a href="https://www.smartkarma.com/entities/enphase-energy-inc" target="_blank" data-smartkarma-citation="entities:8872:1" rel="noopener">Enphase Energy (ENPH US)</a>.

Earlier today, S&amp;P Dow Jones announced that all the proposals of the latest market consultation would be implemented at the close of trading on 16 April to reduce constituent concentration, ease liquidity limitations, and improve index replication further than would have been achieved from the result of the prior market consultation.We expect there will be 37 additions to the index taking the number of index constituents up to 67. This number will increase over the next few rebalances as the target is to get up to at least 100 constituent stocks.With index weight dependent on free float market cap and turnover, plus capping of index weight dependent on exposure scores, this is going to be a large rebalance. We expect a one-way turnover of 48.1% with our expected changes.Stocks that could see passive buying (sorted in terms of days of ADV) are Drax Group PLC (DRX LN), Enel Americas Sa (ENIA US), Fortum OYJ (FUM1V FH), ERG SpA (ERG IM), Terna Rete Elettrica Nazionale (TRN IM), China Longyuan Power Group Corp (916 HK), Nordex SE (NDX1 GR), Acciona SA (ANA SM), Avista Corp (AVA US) and Idacorp Inc (IDA US).Stocks that could see passive selling (sorted in terms of days of ADV) are Meridian Energy (MEL NZ), Contact Energy (CEN NZ), Verbund AG (VER AV), EDP Renovaveis SA (EDPR PL), Scatec Solar ASA (SSO NO), Innergex Renewable Energy (INE CN), Boralex Inc (BLX CN) and Siemens Gamesa Renewable Energy, S.A. (SGRE SM).Among existing constituents, there will be passive inflows on Orsted A/S (ORSTED DC), Vestas Wind Systems A/S (VWS DC), SolarEdge Technologies Inc (SEDG US), Sunrun Inc (RUN US) and Enphase Energy (ENPH US). 

Global Clean Energy Index: All Proposals to Be Implemented; 48% One-Way Turnover

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.

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

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

Siemens Energy Finally Drops the Bomb

On Saturday late evening, Siemens Energy finally announced the expected takeover offer for Siemens Gamesa. Following the umpteenth profit warning,...

Jesus Rodriguez Aguilar

Siemens Energy/Siemens Gamesa: Possible Delisting Offer

Siemens Energy confirms the intention to launch an awaited takeout bid. Takeover regulation allows for several "equitable" (different that fair)...

Jesus Rodriguez Aguilar

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...

Jesus Rodriguez Aguilar

Siemens/Siemens Gamesa: Bid Rumours

I value Siemens Gamesa using a DCF model. My TP is €30.3/share, 14.3% premium to closing price on 18 May. Although I am positive on SGRE, I do not...

Jesus Rodriguez Aguilar

Global Clean Energy Index: All Proposals to Be Implemented; 48% One-Way Turnover

S&P will implement all proposals of the market consultation at the close on 16 April. This will create trading opportunities. One-way turnover is...

Brian Freitas

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