SIEMENS SEEKS DIGITAL ACQUISITIONS AND LARGER PRESENCE IN THE REGION

▶ German technology company plans to invest more than €500m next year in expanding core technologies

German technology conglomerate Siemens is considering software business acquisitions and plans to increase spending by more than €500 million (Dh2.15 billion) to develop its core technologies in 2019. The company is also looking to grow its presence in the Arabian Gulf.

The €500m would focus on the advance and pre-application elements of developing its technologies as part of its bid to meet its 2020 vision, said Roland Busch, chief technology officer of Siemens.

“We will increase [it] because all our businesses recognise that this is where we have to play,” he said.

Mr Busch also spoke of the company’s aspirations for a larger role in the development of petrochemicals and infrastructure and development of smart cities being built across the Gulf, especially in the top two regional economies of Saudi Arabia and the UAE.

The Siemens head declined to reveal the exact figure for the potential spending as its budgeting process for next year is still in progress. The €500m investment in core technologies this year is part of the company’s estimated €5.6bn research and development budget for the year.

The 2018 budget is already an 8 per cent year-on-year rise from the €5.2bn spent a year earlier. About €1.2bn of the total amount is invested in its digital business. Since 2014, Siemens has increased R&D spending by 40 per cent.

The conglomerate has spent about $10bn in software acquisitions since 2007 and it is now scouting for more transactions to build its capabilities.

“We have an investment-dedicated fund for it and in our mergers and acquisitions and capital allocation strategy, the digital space is on top of the agenda,” Mr Busch said.

The company in August signed an agreement to buy application development company Mendix for $730m, a move aimed at accelerating the adoption of Mindsphere – a platform that facilitates data analytics to increase the efficiency and optimisation of businesses. It expects to close the deal in the first quarter of 2019.

Siemens, which has reorganised its business into core and strategic operating companies, said in April that the merger of its rail entity with France’s Alstom will happen by the close of this year. However, the deal, which will create a European champion with combined revenue of €15.3bn, is now expected to conclude in the first half of 2019, he said.

Europe’s largest industrial conglomerate, also wants to boost its presence in the Gulf rail sector, particularly in Saudi Arabia and the UAE, where large scale infrastructure investments and development of metro networks have attracted interest from international companies.