Tuesday, May 17

The market sets a takeover bid for Siemens Gamesa with a 30% premium

The impact of tercer profit warning of Siemens Gamesa in nine months continues to be noted in the market, that if last Friday it began to weigh the options of a takeover bid being the clearest route to solve its problems, this Monday it even sets its price.

Deutsche Bank has raised the recommendation on Siemens Gamesa from neutral to purchase, and according to the information published by Bloomberg, the German bank’s analysis estimates that the chances that the parent of the renewable energy company, Siemens Energy, launches to buy the percentage of titles that it does not control, it is 50 percent.

A heads or tails that, in case of being translated into an exclusion bid that both JP Morgan like his own Deutsche Bank they consider logical, it would be carried out under the payment of 21 euros per share, according to the analyst of the German bank.

Regarding the 16.22 euros with which they opened their price on Monday Siemens Gamesa shares, these 21 euros of the takeover bid would mean a premium of 30 percent for shareholders, who also saw how the titles had dropped 4 percent to 15.6 euros during that same day at noon.

Siemens Gamesa’s profit warning has not gone down well in the market

The director of analysis investment magazine, Josep Codina, warned in the Finanzas.com podcast last Friday that the loss of 16 euros “is a clear stop” for the shares of Siemens Gamesa because it returns the price to “another level of lateral range of correction and fall that can even take it to 12 euros in the worst case.”

The fact that the company IBEX 35 conceded that, based on first-quarter performance and the outlook for the rest of the year, it would have to adjust its guidance for fiscal 2022 by cutting revenue by 2 percent to 9 percent, it doesn’t help “at all” to give confidence and peace of mind for investors, affirmed Codina.

This uncertainty regarding the value also occurs “despite the fact that the excuses (for the downward revision of the forecasts) may be reasonable”, such as the bottlenecks generated in the supply chain.

In this context of lack of visibility on the future of the company in the short term, the director of analysis pointed out that if investors bet on buying “strength” and not “weakness”, it is preferable to “focus on other values” that allow them to withstand the current market fluctuations with less risk.

The opportunity of the bid

Contrary to Codina, Deutsche Bank appears to be betting on an investment strategy based on the revaluation of securities thanks to the redemption of Siemens Energy and great grandpa.

Despite this, however, and even having raised its purchase recommendation, the German bank sets the target price of the share at 20 euros.

This target price is below both the estimated price for this takeover bid and the 12-month value granted by the consensus of analysts, which on Monday stood at 20.98 euros.

The actions of Siemens Gamesa, in addition, they divide a consensus that remains mostly on hold, with 6 purchase recommendations. 13 neutral recommendations, and 6 buy recommendations.

Deutsche Bank has already supported the takeover bid for Siemens Gamesa previously

It is important to note that the revision of the recommendation of Deutsche Bank It comes just over a month after the German bank held a meeting with the financial director of Siemens Energy, after which the financial entity issued an outlook report for the German company in which this acquisition of all of Siemens Gamesa.

“Management confirmed that a 67 percent stake in Siemens Gamesa is a strange amount, and that they will go to 100 percent or 50.1%,” said the Deutsche Bank report.

And in the bank’s opinion, “a complete merger between Siemens Energy and Siemens Gamesa and the consequent simplification of the group’s structure and decision-making processes would make sense”, although the calendar for this hypothetical operation remains unclear.

Deutsche Bank then also pointed out that “potential synergies of barely 150-200 million euros (generated between Siemens Gamesa and Siemens Energy) would be enough to offset any regular premium paid”, which in this case has been estimated at 30 percent.