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Siemens Energy
shares plunged on Friday after
General electrical
sued the German company for the alleged theft of trade secrets that it claims were used to win contracts worth billions of dollars.
Company shares, a spin-off from
Siemens
those listed in September last year, were 6.3% lower at the beginning of the trading session. Despite the drop, the stock still rose 44% since its listing.
The lawsuit, opened to a U.S. District Court in Virginia on Thursday, alleges that Siemens Energy obtained the US giant’s trade secrets when the two companies were competing for a gas turbine contract for a headquartered energy utility. in virginia
Dominion Energy
in May 2019. It claims that a senior Dominion employee shared details of the GE contract bid with a Siemens employee, who then forwarded the trade secrets to ‘dozens’ of colleagues, including those responsible for Siemens’ own proposal.
Read:GE’s shares will go nowhere in 2021. See why JP Morgan is still chasing them.
These secrets were then used to improve Siemens’ own proposal, which ended up winning the contract between $ 225 million and $ 340 million, according to the lawsuit. “To compound this injustice, Siemens waited 16 months before revealing to GE that it owned GE’s trade secrets in September 2020 in a ‘nothing to see here, folks’ letter, in which Siemens misrepresented and minimized the scope and impact of their illegal scheme, ”According to the filing.
The lawsuit states that between May 2019, when the proposed spin-off was announced until its completion in September 2020, Siemens Energy was “highly motivated” to secure as many energy contracts as possible to boost its financial prospects and raise the price of the shares projected before its initial public offering.
It claims that trade secrets are relevant to at least eight other gas turbine contracts “unjustly won” by Siemens Energy in relation to General Electric in the 16-month period before the German company notified GE. He added that the secrets are still relevant to a contract pending in South Carolina, which is being disputed by the two companies, adding that the company “vehemently refused” to assure GE that the secrets were destroyed.
In total, he claimed that the theft allowed Siemens to earn “billions of dollars” in contracts at the expense of GE’s ability to compete fairly.
Citi analysts said the process was negative for the sentiment of Siemens Energy, which has been among the best performers in the industry recently, although they note that the dispute could take a long time to resolve.
“However, in terms of stock price sensitivity, a $ 1 billion fine – potentially at the upper end of the possible scenarios – would amount to about € 1.1 / share, or 3% of the closing price on 14 January, ”they said. “This should be seen in the context of the> 50% increase in Siemens Energy’s share price over the past three months,” they added.
Siemens Energy said it has not yet been officially notified of the lawsuit, but learned of it through media reports.
A spokesman said Barron’s the company identified the use of trade secrets “through its own robust compliance processes”, before conducting internal investigations and disclosing the findings to both Dominion and GE.
Read:Siemens turns off its power unit. What this means for GE inventory.
The company said it implemented “extensive corrective measures” in response, disciplining the employees involved – including separation from the company – removing “competitor confidential information” from all of its systems and providing additional compliance training for all employees in the U.S.
“Siemens Energy’s integrity is fundamental to our operating principles and will not be compromised under any circumstances,” added the spokesman.
A GE spokesman said: “At GE, we aggressively protect and defend our intellectual property. As this dispute is ongoing, we have no further comments at this time. ”
Dominion Energy declined to comment.