This is an interesting move for this management team. CEO Peter Loescher has earned high marks for cleaning up and transforming this company and putting it back on a credible growth path. What makes this decision a little more surprising is that a lot of the mess that Mr. Loescher had to clean up was a byproduct of a long series of questionable deals that never really delivered on their price or promise. Perhaps, then, Siemens is tempting fate. Or perhaps a good CEO is a good CEO and Mr. Loescher can successfully integrate deals where his predecessors could not, making M&A a sound use of Siemens' prodigious cash resources.
Who's on the Menu?
At this point, all that Siemens has really declared is that they want to spend billions of dollars in the automation and power markets. Accordingly, that opens a wide range of possibilities for investors to consider. Right off the top, though, investors should forget about ABB, GE or Honeywell (NYSE:HON). The first two vastly exceed Siemens' budget and antitrust officials would go berserk. Likewise, Schneider Electric (Nasdaq:SBGSY) seems too large despite some clear synergies. As for Honeywell, that would seem to involve Siemens moving into too many new and unrelated markets to justify the synergies that may there in areas like automation and power.
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