Siemens AG, Europe’s largest engineering company, agreed to sell a majority stake in its VAI Metals Technologies business to Mitsubishi Heavy Industries Ltd., according to two people familiar with the plan.
Siemens will retain a 30 percent stake in the Linz, Austria-based division, whose 7,000 employees design, build and maintain plants for the steel industry, to guarantee future business relations, said the people, who asked not to be identified because the matter is private. Oberoesterreichische Nachrichten newspaper first reported the agreement on April 26.
The unit could be valued at 800 million euros ($1.1 billion), Societe Generale SA analyst Gael de Bray estimated Sept. 7. Siemens was considering a sale of the division, people familiar with the situation said in December.
Joe Kaeser, the chief executive officer of Munich-based Siemens, is working through Siemens’s portfolio before a planned update on his strategy May 7. That’s when he’ll announce the VAI sale, the people said. Global steel prices have slumped amid waning demand from automakers and builders and increased competition from low-cost competitors in China.
The market for VAI, formerly called Voest-Alpine Industrieanlagenbau until its 2005 acquisition by Siemens, is very difficult and opportunities are diminishing, Wolfgang Hesoun, the head of Siemens’s Austrian operations, said Dec. 16.
Mitsubishi is itself in the midst of adopting a new company strategy, and formed a fourth pillar of its business dubbed ‘Machinery, Equipment and Systems’ this month. CEO Shunichi Miyanaga said last year the company needed to expand its product offering for the iron and steel manufacturing industry by growing its service network and adding new production bases.