Siemens sells majority stake in comms division

Siemens is to sell 51 per cent of its enterprise communications division to Gores Group

Siemens is to sell a majority stake in its troubled enterprise communications division (SEN) to Gores Group, a US private equity fund with other interests in telecoms.

The German engineering giant has been looking for a buyer for its scandal-hit telecoms business for some months and began a wholesale restructuring programme in February.

Gores Group will take a 51 per cent stake, merging SEN with two companies in its portfolio: Enterasys and SER Solutions. Gores will have operational control of the joint venture.

"Combining the three companies will lead to a more complete enterprise networking and communications offering," said Alec Gores, founder and chairman of Gores Group.

The company has a reputation as a turnaround specialist with a ruthless approach to operational management.

Siemens will retain 49 per cent and hand over patents, trademarks, production and R&D facilities in Germany, Brazil and Greece to the joint venture.

On inception, the two companies will invest €175m each on top of R&D budgets and running costs for the joint venture to spend on new products and acquisitions.

SEN employees in German facilities are protected by Siemens' cosy deals with the powerful German engineering unions to 2011, and the plant in Brazil "will be an important production facility for the joint venture".

Unfortunately "different options are being evaluated" for the Greek workers, according to a Siemens statement.

The joint venture will be a preferred supplier to the Siemens group and have access to its sales and distribution network.

Siemens said that it will offer OpenPath migration for existing products, and that popular products such as HiPath 3000 and 4000 will be continue to be developed and supported.

SEN was one of the Siemens divisions implicated in a wide-ranging corruption scandal at the firm, along with its power generation and distribution arm, transport, industrial services and medical businesses.

In April, law firm Debevoise & Plimpton handed to Siemens' supervisory board a wealth of information gathered from whistleblowers during a corruption amnesty period in February.

The supervisory board is still examining Debevoise & Plimpton's report pending action against individual directors.