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Siemens Energie
stock tumbled on Friday, after
General Electric
sued the German company over the alleged theft of trade secrets she said was used to win billions of dollars worth of contracts.
Shares in the company, a spin of
Siemens
listed in September last year was 6.3% lower in early trading. Despite the decline, the stock has continued to rise by 44% since its listing.
The lawsuit, filed in the U.S. District Court in Virginia on Thursday, alleges that Siemens Energy obtained the U.S. giant’s trade secrets when both companies competed for a gas turbine contract for the power source in Virginia.
Dominion Energy
in May 2019. It is alleged that a senior Dominion employee shared the details of GE’s contract bid with a Siemens employee, who passed on trade secrets to ‘dozens’ of colleagues, including those responsible for Siemens’ own bid .
Read:GE Stock will go nowhere in 2021. That’s why JP Morgan still pans it.
These secrets were then used to improve Siemens’ own bid, and the contract eventually won between $ 225 million and $ 340 million, according to the lawsuit. “With the compilation of this injustice, Siemens then waited 16 months before announcing to GE that it owned GE’s trade secrets in September 2020 in a ‘nothing to see here’, a letter in which Siemens stated the extent and misrepresenting and minimizing the impact of its illegal scheme, ”according to the filing.
The case alleges that between May 2019, when the proposed effect was announced until its completion in September 2020, Siemens Energy was ‘highly motivated’ to enter into as many energy contracts as possible to increase its financial prospects and its predicted share price. its initial public offering.
It is alleged that the trade secrets are relevant to at least eight other gas turbine contracts that Siemens Energy unfairly won over General Electric in the period of 16 months before the German company notified GE. It added that the secrets were still relevant to a pending contract award in South Carolina, for which the two companies compete, and added that the company “steadfastly refused” to ensure GE had the secrets destroyed.
All in all, the theft claims has enabled Siemens to win ‘billions of dollars’ in contracts at the expense of GE’s ability to compete fairly.
Analysts at Citi said the lawsuit was negative for sentiment about Siemens Energy, which was recently one of the top performers in the sector, noting that the process could take a long time to play out.
‘In terms of sensitivity to stock prices, a $ 1 billion fine – possibly at the top of possible scenarios – would equate to around € 1.1 / share, or a 3% hit to the closing price on January 14, they said. “This should be seen in the context of the> 50% rise in Siemens Energy’s share price over the past three months,” they added.
Siemens Energy said that the lawsuit had not yet been officially served, but that it had been reported 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 switches off its power unit. What this means for GE Stock.
The company said it had implemented ‘comprehensive remedial measures’ in response, which disciplined the employees involved – including the separation of the business – and removed the ‘confidential competitor information’ from all its systems and provided additional compliance training for all employees in provided by the USA.
“Siemens Energy’s integrity is fundamental to our operating principles and will not be compromised under any circumstances,” the spokesperson added.
A GE spokesman said: ‘We aggressively protect and defend our intellectual property at GE. As this lawsuit is pending, we have no further comment at this time. ”
Dominion Energy declined to comment.