Siemens will merge five of its businesses to form an independent motors and drives company with revenue of around 3 billion euros ($3 billion), according to CEO Roland Busch on Thursday.

The German engineering firm announced the merger of its large drives applications and Sykatec, a metal component manufacturer and portfolio company.

After management determined that they all shared suppliers, customers, and technologies, they will be joined with Siemens’ high-precision motor spindles unit, Weiss Spindeltechnologie, as well as its low voltage motors and geared motors divisions from Digital Industries.

“We’ve decided to combine these businesses during fiscal 2023 to form a new company with its own legal setup,” Busch told reporters after Siemens reported its Q4 earnings.

“We’re convinced that this integrated motors and large drives provider – with high value creation – will be significantly stronger and more resilient than each business would be if it operated independently.”

Siemens said the new company would have 14,000 employees and would operate in a market for electrification and power conversion worth around 20 billion euros.

It will compete with ABB of Switzerland and Yaskawa of Japan. Siemens will continue to be active in the industrial motors market through its servo motors division, which manufactures motors for robots and integrated production lines.

Busch did not say whether the new company would eventually be floated, spun off, or sold.

“The goal is to make the combined business completely independent of Siemens in order to ensure it can reach its full value and margin potential and optimally prepare for future success,” he said.

(Adapted from Reuters.com)