Technology firm Siemens' board on Friday approved the sale of low voltage motors and geared motors businesses to a Siemens AG subsidiary, Siemens Large Drives India, for Rs 2,200 crore.

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The Board of Directors of Siemens Limited has approved the sale and transfer of low voltage motors and geared motors businesses, including related customer service business to Siemens Large Drives India Pvt Ltd, an entity wholly owned by Siemens AG, for a consideration of Rs 2,200 crore with effect from October 1, 2023, a company statement said.

The transaction is subject to fulfilment of conditions precedents agreed upon between the parties, including receipt of requisite shareholders, statutory and regulatory approvals, as applicable, it added. The Board has also decided to consider the distribution of 100 per cent of the sale consideration as reduced by applicable Capital Gains Tax and any other applicable taxes, if any, on the transaction, as a special dividend, at the first board meeting after the completion of the proposed transaction.

The valuation was done by an external independent valuer. In addition, the company also obtained a fairness opinion from a Category-I Merchant Banker. The consideration for the proposed transaction, recommended by the audit committee, is based on the valuation undertaken by the independent valuer, the statement said.

For FY22, the business recorded revenue from operations of Rs 1,061 crore and profit from operations of Rs 132 crore equivalent to around 12.5 per cent of revenue. This represents around seven per cent of the company's revenue from operations and around nine per cent of its profit from operations. The company follows October to September financial year.

This transaction is consequent to the intent of Siemens AG to carve out the low voltage motors and geared motors business among others globally into a legally separate company and is based on Siemens AG's decision to form Innomotics, an integrated provider of motors and large drives.

Effective July 1, 2023, the carve-out in Germany will be completed and Innomotics GmbH (Germany) will operate as a legally separate and independent company within the Siemens Group.

Siemens AG indicated in a second step to diligently review options regarding the best future ownership of Innomotics. Such options include a public listing as well as a combination with a strategic partner or long-term-oriented financial investor.

Siemens Managing Director and Chief Executive Officer Sunil Mathur said, "Siemens is focused on further strengthening its position as a leading technology company. We will continue to consolidate our business along high-growth areas that have synergies with the rest of the businesses. This will enable the company to optimise its portfolio as a strategic lever, creating value and cash for Siemens"