©Bloomberg

Siemens has agreed to pay €3.75 a share in cash to shareholders of Spanish renewables group Gamesa, as part of a deal that will see their wind businesses combined to form the world’s biggest builder of turbines, valued at about €10bn.

Under the terms of the deal, which the two companies have been discussing since the start of the year, the combined entity will be 59 per cent owned by the German industrial group.

Once merged, the business will be listed and headquartered in Spain, and is expected to have an order backlog of about €20bn, annual revenues of €9.3bn and operating profit of €839m.

The deal is estimated to lead to annual earnings synergies of roughly €230m, before interest and tax.

Siemens’ €3.75-a-share cash payment represents 26 per cent of Gamesa’s share price on January 28, before the talks were disclosed. Gamesa’s shares were suspended in Spain on Friday. They closed at €15.475 on Thursday.

Ignacio Martín, executive chairman of Gamesa, said: “The merger with Siemens constitutes recognition for the work performed by the company in recent years and evidences our commitment to generating value in the long term by creating significant synergies and extending the horizon of our profitable growth.”

He predicted the combined group would become the dominant player in wind turbine construction. “Today, we are embarking on a new era, creating, alongside Siemens, a world-leading wind player,” he told investors. “We will continue to work as before, albeit as part of a stronger company and with an enhanced ability to offer all of our customers end-to-end solutions.”

Siemens and Gamesa began talks after a round of consolidation in the energy sector including General Electric’s purchase of Alstom’s energy business and a merger between Germany’s Nordex and Spanish rival Acciona Wind Power.

Before their deal talks, Siemens had a 9.5 per cent share of the global wind turbine market, according to data from FTI Consulting, which made it the second-biggest manufacturer after Denmark’s Vestas, which had a share of nearly 12 per cent.

But Gamesa’s 4.5 per cent market share put it behind other large players, such as China’s Goldwind, which has been expanding internationally into fast-growing renewable energy markets in Latin America, as well as the US and Europe.