Siemens in talks with buyout groups over Flender business: sources

FRANKFURT (Reuters) – Siemens SIEGn.DE is in talks with Triton and other buyout groups to sell its 1.5-2 billion euro ($1.8-$2.4 bln) transmissions maker Flender, people close to the matter said, part of the industrial conglomerate’s plans to streamline its operations.

FILE PHOTO: The headquarters of Siemens AG is seen in Munich, Germany, December 18, 2019. REUTERS/Michael Dalder

Siemens has asked Triton, Carlyle CG.O, CVC and Brookfield to submit final offers next week for the business, which has earnings before interest, tax, depreciation and amortisation of just above 200 million euros and could be valued at 8-9 times that, the sources added.

The trains to industrial software maker has simplified its structure in the past few years, floating its turbines and generators supplier Siemens Energy ENR1n.DE last month after spinning off its Healthineers SHLG.DE division in 2018.

Siemens, its advisers for the Flender deal — Citi C.N and Bank of America BAC.N — as well as the suitors, declined to comment.

Flender supplies Winergy branded gear boxes and generators for wind turbines, gears and couplings for cranes, ships, oil and gas production, as well as components for the chemicals, pharma, cement and food industries.

Triton bought rival transmissions maker Renk ZARG.F earlier this year and has plans to use this company as a platform to consolidate transmissions makers. It is seen as having an edge over other suitors in the auction as it would be able to reap synergies by merging Flender with Renk, the sources said.

Flender’s long-term supply contracts with Siemens’ wind turbine maker Gamesa SGREN.MC are seen as a crucial element of determining the valuation of Flender, one of the people said.

If final offers fall short of Siemens’ expectations, the industrial conglomerate will opt to spin off the business as a separately listed company, the sources also said.

Siemens bought Flender, which traces its roots back to a 19th century maker of belt pulleys, from Babcock Borsig in 2005. Flender has, however, not lived up to Siemens’ growth and profitability expectations.

Products for the wind power sector have strong growth prospects but the outlook for the other industries the company serves are less positive, the people said.

($1 = 0.8519 euros)

Additional reporting by Alexander Hübner and Tom Käckenhoff, editing by Emma Thomasson and Jane Merriman

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