In a strategic move to fund its $10.6 billion acquisition of Altair Engineering, Siemens is considering selling portions of its stakes in critical subsidiaries, including Siemens Healthineers, Siemens Energy, and Fluence. This decision comes as the company seeks to bolster its industrial software capabilities and enhance its position in the rapidly evolving technology market.
Financing the Altair Deal
Siemens Chief Financial Officer Ralf Thomas announced on October 31 that the company holds significant financial potential by selling shares in listed entities. Currently, Siemens owns 75% of Siemens Healthineers, a leading medical equipment manufacturer, 17% of Siemens Energy, and 31% of energy storage firm Fluence.
“We have substantial financial potential from the sale of shares in listed entities,” Thomas told analysts, emphasizing that the intent to use the proceeds from these sales is related to the Altair acquisition.
The recent sale of Siemens’s Innomotics electric motors and drives business generated approximately €3.5 billion ($3.81 billion), providing additional financial flexibility.
Rationale Behind the Stake Reductions
Thomas indicated that Siemens is not “religious” about maintaining a 75% shareholding in Siemens Healthineers. “Give or take, 5% would be a meaningful assumption for a sell-down,” he noted. Additionally, the company plans to reduce its stake in Siemens Energy within the next few months, aligning its financial strategy with the upcoming Altair acquisition.
Market Impact and Shareholder Considerations
Siemens aims to minimize the impact of these share sales on the affected companies’ stock prices. Thomas reassured analysts that previous reductions in Siemens Energy investments were executed smoothly without causing significant market disruption. “We will definitely protect the share price of those companies being affected,” he stated.
This approach reflects Siemens’s commitment to maintaining investor confidence while strategically reallocating resources to enhance its industrial software portfolio.
Strategic Importance of the Altair Acquisition
The acquisition of Altair Engineering is a critical step for Siemens as it seeks to strengthen its capabilities in product lifecycle management (PLM) and advanced engineering software. Altair’s expertise in data analytics and simulation technologies will allow Siemens to deliver more robust solutions to its customers, particularly in industries that rely heavily on innovative engineering.
The PLM market, valued at approximately $10 billion annually, is projected to grow by 10% over the next five years. By enhancing its market share through this acquisition, Siemens aims to position itself competitively against leading firms in the industry.
Conclusion
Siemens’s consideration of stake reductions in Healthineers, Siemens Energy, and Fluence underscores its strategic focus on funding the Altair acquisition and strengthening its position in the industrial software market. By effectively managing its investments and minimizing market impact, Siemens is poised to capitalize on growth opportunities in the evolving technology landscape and ensure long-term success.
