Siemens AG (SIE), Europe’s largest engineering company, plans to sell its water-technologies division to AEA Investors as it focuses on higher-margin businesses, according to two people familiar with the matter.
The deal may value the unit at about $800 million and could be announced this week, the people said, asking not to be identified as the talks are private. Siemens and AEA, a New York-based private-equity firm, declined to comment on a potential deal.
Siemens, which replaced Chief Executive Officer Peter Loescher with finance chief Joe Kaeser in August, is also selling other units as it focusses on businesses it deems to have better growth prospects. The water technologies unit, including wastewater, municipal and industrial water purification services as well as membrane filtration systems, was put up for sale in 2012.
AEA Investors, a private-equity firm founded in 1968, focuses on investments in industrials, specialty chemicals, consumer products and services, according to its website. AEA’s middle-market private-equity team manages about $3.6 billion of invested and committed capital.
Siemens, based in Munich, this year sold its 50 percent stake in Nokia Siemens Networks, subsequently renamed Nokia Solutions and Networks, for 1.7 billion euros ($2.3 billion), and divested its loss-making solar-thermal power assets. Loescher was ousted as CEO after saying the company wouldn’t meet a 12 percent profit margin target in the 2014 fiscal year, his fifth missed goal in six years.
While still CFO, Kaeser said he expected to complete disposals of businesses including airport luggage systems, mail automation and water technology in the fiscal year that starts Oct. 1.
Kaeser is also widening job cuts from an initial plan after the failure to catch up in profitability with rivals General Electric Co. and ABB Ltd. (ABBN) cost his predecessor the job.
The company will eliminate 15,000 posts, representing 4 percent of its 370,000 workers worldwide, and a third of the reduction will come in the German home market, Siemens said in September. The company had first projected some 8,000 job cuts globally, a person familiar with the program told Bloomberg in October 2012.
Siemens had a profit margin of 9.5 percent in fiscal 2012, while ABB and General Electric had margins of 10.3 percent and 15 percent, respectively. In August, Siemens’s debt was downgraded by Fitch Ratings, which cited an accelerating decline in the manufacturer’s margins in the most recent quarter and “insufficient progress” on restructuring measures.
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