The divestment is in line with Siemens' plan to carve out the low voltage motors and geared motors business globally into a legally separate company.
Siemens Ltd is divesting its low voltage motors and geared motors businesses including related customer service business to Siemens Large Drives India Private Ltd, a wholly subsidiary of Siemens AG, for a consideration of INR2,200 crore with effect from October 1, 2023.
The transaction is subject to fulfilment of conditions precedents agreed between the parties, including receipt of requisite shareholders, statutory and regulatory approvals, as applicable.
The Board of Directors has decided to consider the distribution of 100% of the sale consideration as reduced by applicable Capital Gains Tax, and any other applicable taxes, if any, on the transaction, as a special dividend, at the first Board Meeting after completion of the proposed transaction.
The valuation was done by an external independent valuer. In addition, the company also obtained a fairness opinion from a Category-I Merchant Banker. The consideration for the proposed transaction, recommended by the Audit committee, is based on the valuation undertaken by the independent valuer.
For FY 2022, the business recorded a revenue from operations of INR1,061 crore and profit from operations of INR132 crore equivalent to around 12.5% of revenue. This represents around 7% of the company’s revenue from operations and around 9% of the company’s profit from operations.
This transaction is consequent to the intent of Siemens AG to carve out the low voltage motors and geared motors business, among others, globally into a legally separate company and is based on Siemens AG’s decision to form Innomotics, an integrated provider of motors and large drives. Effective July 1, 2023, the carve-out in Germany will be completed and Innomotics GmbH (Germany) will operate as a legally separate and independent company within the Siemens Group.
Siemens AG indicated in a second step to diligently review options regarding the best future ownership of Innomotics. Such options include a public listing as well as a combination with a strategic partner or long-term oriented financial investor.
“Siemens Limited is focused on further strengthening its position as a leading technology company. We will continue to consolidate our business along high-growth areas that have synergies with the rest of the businesses. This will enable the company to optimize its portfolio as a strategic lever, creating value and cash for Siemens,” said Sunil Mathur, Managing Director and Chief Executive Officer, Siemens Ltd.