• Companies said to plan announcement as soon as Tuesday
  • The deal would create world's largest wind-turbine maker

Siemens AG is close to a deal to combine its wind business with Gamesa Corp. Tecnologica SA, according to people familiar with the negotiations. Gamesa’s shares surged.

Employees secure fiberglass sheeting fabric to a wind turbine blade inside the Gamesa Corp Tecnologica SA factory in As Somozas, Spain.
Employees secure fiberglass sheeting fabric to a wind turbine blade inside the Gamesa Corp Tecnologica SA factory in As Somozas, Spain.
Photographer: Angel Navarrete/Bloomberg

A deal could be announced as soon as Tuesday, said the people, who asked not to be identified because discussions are private. While negotiations are advanced, the plans aren’t final, they said.

Gamesa, based in Zamudio, Spain, said on Jan. 29 it was in negotiations to combine its operations with Siemens, a move that would create the world’s largest wind-turbine maker. Siemens would hold a majority stake in the combined entity, a person familiar with the matter said at the time. Europe’s largest engineering company is also holding talks about buying Iberdrola SA’s 20 percent stake in Gamesa, people familiar with the talks had said.

Representatives for Siemens and Gamesa declined to comment.

Gamesa shares rose 5.6 percent to close at 16.54 euros in Madrid, valuing the company at about 4.6 billion euros ($5.2 billion), compared with a 4 billion-euro value before Siemens’s interest was reported. Siemens fell 56 cents to 81.99 euros.

The Spanish company’s network of installed turbines is attractive to Siemens, which has been trying to expand revenue from service contracts. The German engineering firm leads in machines designed for use offshore, while Gamesa specializes in on-shore wind. Together, they’d have about 15 percent of the global wind market, making the combined company the world’s largest maker of wind-turbines, exceeding Vestas Wind Systems A/S’s 10 percent share, and General Electric Co.’s 11 percent, according to data compiled by BNEF.

The wind division is the smallest of Siemens’s eight operational businesses, and also has the lowest profitability target.