Siemens sells mechanical drives business to Siemens AG subsidiary.

Siemens’ board of directors have approved to sell the company's mechanical drives (MD) business to Flender Drives Private Limited, a subsidiary of Flender GmbH, which in turn is a subsidiary of Siemens AG.

“The Board of Directors of Siemens Limited has approved the sale and transfer of its Mechanical Drives (MD) business for a consideration of Rs. 440 crore,” the company said.In a late evening statement on Wednesday, the company said the transaction is on a slump sale basis, with effect from January next year, subject to receipt of requisite statutory approvals.

Sunil Mathur, managing director and chief executive officer for Siemens said, “Potential growth in this business will require substantial Capex and moreover, there are no synergies with the existing businesses of Siemens Limited.” He added, “Keeping the interests of the shareholders in mind, the Board has approved the sale of this business to Siemens AG which has also announced their intention to publicly list this business via a spin-off.”

The consideration has been arrived at on the basis of an independent valuation, recommended by the Committee of Directors and the Audit committee, the statement added. The MD business within Siemens Limited achieved a revenue of Rs. 683 crore for FY2019 and had an operating loss of Rs. 55.3 crore.

BS