Siemens AG won approval from the European Commission on July 13, to acquire Austria's VA Tech on condition that the German engineering giant sell off certain businesses. Both Siemens and VA Tech are active worldwide in power plants, high-voltage transmission lines, locomotives, steel plants and large buildings, and the Commission had been worried the take-over could create significant competition problems.
To put to rest the Commission's worries, Siemens has promised to divest itself of VA Tech's hydropower business and ensure the independence of metal plant builder SMS Demag.
"In this particular case, I wanted ... to be sure that final consumers would not have to pay higher electricity prices passed on to them by suppliers because of more expensive hydropower plants," EU Competition Commissioner Neelie Kroes said in a statement.
Siemens had acknowledged publicly that the proposed deal raised some competition problems and said it would immediately initiate the sale of VA Tech's power generation equipment business.
In a statement, Siemens also said that after completing the purchase of VA Tech it would start a procedure to buy out remaining shareholders of VA Tech and delist it.
A spokesman for VA Tech declined to comment.
VA Tech Hydro is the European market leader for key components used in hydroelectric plants such as turbines and generators, and the Commission had found that a merger with Siemens' hydro business would have resulted in competition being significantly impeded.
"Siemens' commitment to sell VA Tech's hydropower business, operated by VA Tech Hydro, to a suitable purchaser means that competition will not be significantly affected," the Commission said.
In the area of metal plant building, Siemens owns 28 percent of German firm SMS Demag, which the Commission found to be VA Tech's main competitor in the building of steel production plants.
A plan by Siemens to sell its SMS Demag stake to parent company SMS has been held up by a legal dispute over valuation. But the Commission said Siemens representatives on SMS Demag's shareholder bodies will be replaced by trustees, thus ensuring the company's independence from Siemens.
The Commission also said it had released Canada's Bombardier from an obligation to purchase certain traction systems for trams from VA Tech.
This condition was imposed in 2001 when the Commission cleared Bombardier's take-over of ADtranz. However, it has now lifted this condition to end any ties between Bombardier and Siemens in trams.
Comments
Comments are closed.