Siemens to sell Healthineers stake in IPO in first half of 2018

Bloomberg

Siemens AG will press ahead with an initial public offering of its health-care unit as CEO Joe Kaeser unloads another key business at Europe’s largest engineering company.
The IPO of “a meaningful minority share” in Siemens Healthineers, as the company is known, will be completed in the first half of the year on the Frankfurt Stock Exchange, subject to market conditions, the Munich-based company said in a statement. While Siemens didn’t give details on the size of the sale, it’s likely to be one of the biggest equity offerings ever in Germany. Siemens aims to raise as much as 10 billion euros ($12.4 billion) by selling up to 25 percent of the business, valuing Healthineers at as much as 40 billion euros, people familiar with the matter said in January.
“Siemens Healthineers is a premium asset and we have worked hard to now list such an exciting franchise,” said Michael Sen, chairman of the health unit’s supervisory board and member of the Siemens managing board. “We expect the business to capitalise on its strengths even more effectively after the listing.”
The IPO is part of a broad overhaul of Siemens by Kaeser, who also merged the wind power unit with Spanish competitor Gamesa SA in 2017 and is combining the company’s train business with that of Alstom SA.
According to people familiar with the matter, Siemens also plans to sell the Flender GmbH mechanical drives operation. Kaeser has likened the moves as shifting the company from being an aircraft carrier to a nimble fleet of ships.
Not all the transactions have gone smoothly. Siemens Gamesa Renewable Energy issued two profit warnings after its merger and announced it would cut about a quarter of its workforce in November. A prolonged slump in demand for wind turbines and changes to wind energy pricing in India hit wind energy companies across the board in 2017.
Siemens is moving ahead after a stumble in global equity markets beginning in late January led some companies to cancel planned IPOs. Germany’s benchmark DAX Index slumped as much as 11 percent from its January peak and has since recovered some of the losses.
Siemens announced in November 2016 that it planned an IPO of a minority stake in the unit. The business makes imaging and diagnostic equipment used in hospitals, medical practices and labs. Competitors include General Electric Co. and Royal Philips NV. Healthineers will remain core to the parent company and will be consolidated in its financial accounts, Siemens said.
Shares of Siemens AG rose 1 percent to close at 111.18 euros. The health business had revenue of 13.8 billion euros in 2017 and adjusted profit of 2.5 billion euros, equal to a profit margin of about 18 percent. Siemens Healthineers will aim to pay a dividend of 50 percent to 60 percent of net income, the company said.