Siemens AG to buy out Flender from Citigroup for 1.2 bn euro

March 30 | Updated: Mar 31 2005, 05:30am hrs
Siemens AG, Europes largest engineering company, plans to buy a German maker of ship motors and windmill turbines from Citigroup Inc for 1.2 billion euros ($1.5 billion) to expand its automation division.

The purchase of Flender Holding GmbH adds 6,700 employees to Munich-based Siemens and about 1 billion euros in annual revenue, Siemens said in a faxed statement today. Previous owners of Bocholt-based Flender include German engineering company Babcock Borsig AG, which sold its stake to Citigroup in 2000.

This is a good step for Siemens, said Christoph Niesel, who manages the equivalent of $2.7 billion at Union Investment in Frankfurt and is Siemenss biggest institutional investor.

Every investment they do at the moment is good. Cash simply does not generate enough return right now. Its the second purchase this month for Siemens after a $967 million acquisition of a US medical technology company, as new chief executive officer Klaus Kleinfeld seeks to bolster the companys lead in the 25 billion-euro market for automation equipment. Siemenss automation unit was its most steady contributor to overall operating profit in the past six years. The global market for industrial automation equipment is growing at 2.5% each year, according to Siemens. Siemens competes with companies including Rockwell Automation Inc, Schneider Electric SA of France and Emerson Electric Co in the global market for industrial automation.