Siemens AG (SI) is set to acquire the solar thermal power company Solel Solar Systems Ltd. To date, the majority stake has been held by Ecofin Ltd., a London-based investment firm, and another major shareholder.

The purchase price is about $418 million (currently equivalent to around €284 million). The transaction is subject to approval by the responsible authorities. It is anticipated that the closing will take place before the end of this calendar year.

Solel is a successful company in the future-oriented solar power sector, with decades of experience in the development and manufacture of solar field equipment and the planning and construction of solar fields. Since 2006, Solel has also been present on the Spanish market, supplying key components for 15 solar thermal power plants with a combined capacity of 750 megawatts. In addition, the company is also active on the important U.S. market.

Siemens is the market leader in steam turbines for solar thermal power plants and with the power block it can offer a key part for solar power plants – the part that is responsible for power generation. Solel boasts high-efficiency receiver technology and comprehensive expertise in the engineering and construction of solar fields. In the future, Siemens will be able to offer the key components for the construction of parabolic trough power plants from a single source and to further enhance the efficiency of these plants. Parabolic trough power plants are the solar-based power generation technology with the best track record of all utility-scale solar technologies.

Siemens has estimated that until 2020, the market for solar thermal power plants will show annual double-digit growth rates and attain a volume of over €20 billion. In the future, its primary focal growth regions will be the U.S., South Africa, Australia, Spain, India, North Africa and the Middle East.

Products and solutions for solar thermal power plants are part of the Siemens Environmental Portfolio, with which the company posted revenue of nearly €19 billion in fiscal 2008 – about a quarter of Siemens’ total sales – making Siemens the world’s leading provider of eco-friendly technologies.

Siemens AG is a global powerhouse in electronics and electrical engineering, operating in the industry, energy and healthcare sectors. The company has around 410,000 employees working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of solutions for individual requirements. Major competitors are ABB Ltd. (ABB) and General Electric Co. (GE).

We currently have a Neutral recommendation on Siemens.

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