Two heavyweights, Japan’s Nidec and New York-based KPS Capital Partners, are locked in a high-stakes competition to acquire Siemens AG’s Innomotics large motors business. The potential sale could reach a whopping $3.3 billion (¥483.6 billion), according to insiders close to the matter.
Both parties have progressed to the second round of bidding for Innomotics, sources revealed on condition of anonymity due to the sensitive nature of the information.
Nidec, headquartered in Kyoto and known for its precision and automotive motors, is considered a natural fit for the Siemens unit. Meanwhile, KPS Capital Partners has made a name for itself in Germany with the acquisition of Thyssenkrupp’s Waupaca iron foundry in 2012, later selling it to Hitachi Metals. It remains unclear if other bidders are still in contention.
Although deliberations are ongoing, there is no guarantee that a deal will be reached. Representatives for Siemens and KPS declined to comment, while a spokesperson for Nidec stated that they could not provide any information on the matter.
The news of the potential acquisition has already had an impact, with Nidec’s shares dropping by as much as 3.2%, the largest decline in seven weeks. If successful, the deal would be the largest in Nidec’s history, based on available data. Nidec currently boasts a market value of approximately $22 billion.
Innomotics specializes in heavy-duty electric motors used in ships and mining equipment, reportedly generating annual earnings before interest, taxes, depreciation, and amortization (EBITDA) ranging from €300 million to €400 million, according to insiders.
Siemens established Innomotics as a separate entity last year and has expressed intentions to either list the company on the stock market or sell it off. Goldman Sachs Group and BNP Paribas are advising Siemens on its strategic options for the business, sources revealed, with a spokesperson for Goldman Sachs declining to comment.
For Siemens, offloading Innomotics would mark a significant milestone in its strategic overhaul, which has seen the company divest from heavy-equipment businesses in favor of higher-margin, software-driven product lines, aligning it with the profitability levels of its competitors.
Nidec’s potential acquisition of Innomotics comes at a pivotal moment, coinciding with the transition from its billionaire founder and CEO, Shigenobu Nagamori, to Mitsuya Kishida. Kishida is set to spearhead Nidec’s foray into electric-vehicle motors, further solidifying the company’s position as a key player in the global electric vehicle market.
(Source: Reuters | Japan Times | Nasdaq)
