Joe Kaeser’s Retirement Gift at Siemens: A Rusty Mercedes?

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Joe Kaeser’s Retirement Gift at Siemens: A Rusty Mercedes?

Listing Siemens Energy AG is one of Kaeser’s last big strategic moves at the helm of the factory automation giant. He’s due to hand over some responsibilities to successor Roland Busch later this week before stepping down in February. He already has a new gig lined up as chairman of Siemens Energy’s supervisory board. But that won’t occupy all his time.

The chairmanship of Daimler has just become free, too, and it’s a job where Kaeser’s capital markets prowess and willingness to shake up Germany’s corporate culture could prove useful.

Daimler started looking for a new chairman after its ex-CEO Dieter Zetsche withdrew his candidacy at the weekend. The incumbent Manfred Bischoff retires next year. Zetsche’s once stellar reputation has soured lately because of legal troubles related to Mercedes’s diesel emissions and the perception that it was too slow to invest in electric vehicles.

Kaeser has been a non-executive director at Daimler for years, so he must know that it suffers from the same disease he’s tried to cure at Siemens. Daimler’s market value is less than 50 billion euros ($58 billion). That’s pretty lamentable considering it generated 173 billion euros in revenue last year and has some of the most desirable automotive brands. The stock is where it was a decade ago. 

Based on an analysis of similar businesses such as Volvo AB, Daimler’s commercial vehicles unit alone is worth 35 billion euros, according to Bernstein Research analyst Arndt Ellinghorst. 

Famously bureaucratic, Daimler has already taken steps to help investors better appreciate the value of its businesses. Mercedes’s car-sharing and taxi-hailing units were merged with those of rival BMW AG. There was speculation that the combined entity — called Your Now — might one day be listed. The ride-hailing part has since drawn takeover interest from Uber Technologies Inc., Bloomberg News reported.

Daimler also spent several hundred million euros to legally separate its cars and vans business from its trucks and bus activities. But its executives haven’t hurried to take the next logical step: an initial public offering of the commercial-vehicle assets.

In fairness, Germany’s two-tier boards give workers a big say in how companies are run, and achieving consensus often rules out radical measures. Kaeser’s ability to overcome such inertia was the one remarkable thing about his seven-year tenure at Siemens. He really shook things up.

Kaeser merged Siemens’s wind turbine business with Spain’s Gamesa and sold shares in Siemens Healthineers AG, which supplies hospital equipment. By giving these businesses their own stock market listings and independence, Kaeser kept activist investors at bay. Siemens shares have returned almost 9% annually since Kaeser took over in 2013, according to Bloomberg data, which is better than its industrial peer group.

He’s had failures, too. In 2014 Kaeser overpaid for Dresser Rand, a U.S. oil and gas equipment supplier. A train merger with Alstom SA was blocked by antitrust concerns and Siemens Gamesa Renewable Energy SA has struggled with management upheaval. Siemens stock still trades at a discount to industrial-automation rivals such as Rockwell Automation Inc.

Kaeser’s appointment might also unnerve Stuttgart for non-corporate reasons too. He’s been increasingly outspoken on political and social issues. The 78-year old Bischoff isn’t on Twitter.

Perhaps some spark would do Daimler good, though. New CEO Ola Kallenius is the first non-German to run the car giant and, after a shaky start, he seems determined to address Mercedes’s chronic underperformance. A big restructuring lies ahead.

Provided Kaeser didn’t overshadow the younger CEO, the Siemens boss might bring some useful tools for renewing Daimler.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.


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