Carlyle carves-out Siemens’ Flender division for €2bn

Carlyle has acquired Siemens’ Flender mechanical and electrical drive technology business for €2bn.

Headquartered in Bocholt, Germany, and active in 35 countries including across Europe and Asia, Flender employs about 8,600 people and had sales of €2.2bn in FY20. The company’s product and service portfolio include gearboxes, couplings, and generators for a wide variety of industries.

Siemens expects the deal to close in the first half of next year, subject to regulatory approvals, with the German engineering giant using the proceeds to strengthen its balance sheet.

The company had said earlier this year that it intended to spin off and publicly list the subsidiary. The carve-out follows the German engineering group’s sales of its turbines and generators supplier Siemens Energy last month and spinning off its Healthineers division in 2018.

“By selling Flender, we’re successfully and rigorously continuing our strategy to become a new, focused Siemens AG,” Siemens chief executive Joe Kaeser said.

“Our plan of fixing the businesses ourselves by introducing the structures used in small and midsized companies has proven effective,” he added.

Carlyle said in a statement it aims to support Flender’s growth as a standalone company, through “operational and strategic improvements, including investment into its technology and service platform”.

Janine Feng, managing director of Carlyle Asia Partners, said the firm will help Flender further solidify its position in wind and industrial gears in Asia, and to support the long-term development of wind power in the continent and globally.

“China is expected to remain a major driver of the global renewable energy transition and has pledged to become carbon neutral by 2060. We are excited by the significant growth opportunity of wind energy development in China and across Asia”, Feng added.

Equity for the investment will be provided by Carlyle Europe Partners V fund, a €6.4bn vehicle and Carlyle Asia Partners V, a $6.6bn fund, the private equity giant said in a statement.

The firm, which manages one the largest industrial portfolios in the world with $20bn in assets in the sector, is experienced in executing complex carve-out transactions to build standalone business. Recent transactions include two chemical makers: Nouryon, purchased by Carlyle and GIC in 2018 for $11.8bn, and Germany-based Atotech, acquired in a deal worth $3.2bn in 2016.

According to its latest financial results, the firm’s assets under management were about $230bn as of the end of the third quarter, a 4% increase from the prior quarter and a 2% increase year-to-date. Despite the pandemic, Carlyle said it raised about $18bn during the first three quarters of 2020, compared with $16bn in the same period last year.

Source: Private Equity News