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Siemens Energy
the stock fell on Friday, after
General Electric
sued the German company for alleged theft of trade secrets it said were used to win contracts worth billions of dollars.
Shares in the company, a spin-off of
Siemens
that listed in September of last year, was 6.3% lower at the start of trading. Despite the drop, the stock has still risen 44% since its IPO.
The lawsuit, filed Thursday in a U.S. District Court in Virginia, alleges Siemens Energy obtained trade secrets from the U.S. giant when the two companies competed for a gas turbine contract for the Virginia-based electric utility. .
Dominion Energy
in May 2019. He claims that a senior Dominion employee shared details of GE’s contractual offer with a Siemens employee, who then passed on the trade secrets to “dozens” of colleagues, including those responsible for Siemens’ offer.
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Those secrets were then used to improve Siemens’ own offering, ultimately winning the contract worth between $ 225 million and $ 340 million, according to the lawsuit. To compound this injustice, Siemens then waited 16 months before disclosing to GE that it owned GE’s trade secrets in September 2020 in a ‘nothing to do here, folks’ letter, in which Siemens distorted and downplayed scope and impact of his illegal scheme, ”according to the filing.
The lawsuit claims that between May 2019, when the proposed split was announced until its completion in September 2020, Siemens Energy was “very motivated” to secure as many energy contracts as possible in order to improve its financial outlook and increase the share price expected before its IPO.
It alleges that the trade secrets are relevant to at least eight other gas turbine contracts “unfairly won” by Siemens Energy on General Electric in the 16 months preceding the German company’s notification to GE. He added that the secrets were still relevant to the award of a pending contract in South Carolina, facing competition from the two companies, adding that the company had “firmly refused” to assure GE that the secrets had been destroyed.
In total, he alleged that the theft allowed Siemens to win “billions of dollars” in contracts at the expense of GE’s ability to compete fairly.
Citi analysts said the lawsuit was negative for sentiment on Siemens Energy, which has recently been among the best performers in the industry, while noting that litigation can take a long time to unfold.
“However, in terms of share price sensitivity, a $ 1 billion fine – potentially at the high end of possible scenarios – would equate to around € 1.1 / share, or a 3% impact on the market. closing price on January 14, “they said. “This has to be seen against the background of the> 50% increase in Siemens Energy’s share price over the past three months,” they added.
Siemens Energy said it had not yet been officially served on the lawsuit, but learned about it in the media.
A spokesperson said Barron’s the company identified the use of trade secrets “through its own robust compliance processes,” before conducting an internal investigation and disclosing the findings to Dominion and GE.
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The company said it had implemented “extensive corrective measures” in response, sanctioning the employees involved – including the separation of the company – removing “competitor confidential information” from all of its systems and offering training additional compliance for all employees in the United States.
“The integrity of Siemens Energy is the basis of our operating principles and will not be compromised in any way,” added the spokesperson.
A GE spokesperson said, “At GE, we aggressively protect and defend our intellectual property. As this litigation is ongoing, we have no further comments at this time. ”
Dominion Energy declined to comment.
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