Business / Corporate

Siemens talking with Mitsubishi Heavy and other Asian firms over fate of large gas turbine business

Bloomberg

Siemens AG is exploring a variety of options regarding its large gas turbine business by seeking an Asian partner, including a possible deal with Mitsubishi Heavy Industries Ltd., according to people familiar with the matter.

The German company has held talks with Mitsubishi Heavy and other firms, said the people, who asked not to be identified because the talks are private. Options range from a full or partial sale of the division to a joint venture, the people said. No final decisions have been made and Siemens may still decide to keep the unit, they said.

Siemens shares advanced as much as 2.6 percent following the report, the most in more than a month.

“The situation on the global market for fossil power-plant technology remains unchanged,” the company said in a statement, declining to comment on talks about the turbine business. “Siemens began tackling these challenges back in early 2015.”

A spokesman for Mitsubishi Heavy declined to comment.

Siemens has been considering options for the large gas turbine business, which forms the largest part of its power and gas division, since at least last June, when people familiar with the matter said the German engineering company was considering a potential sale.

The global market for gas turbines has collapsed as renewable energy has become cheaper. Siemens announced in 2017 it would cut 6,900 jobs in its power and gas division to respond to that shift.

The power and gas division will be renamed gas and power on April 1, reflecting the company’s new structure. Siemens announced last year that it was shrinking the number of operating divisions and that it would focus on factory software and energy distribution, attempting to get the jump on newer technologies that had been disrupting its core business.