Siemens paves way to hive off healthcare unit

Corporate News

Siemens products on sale at a department store in China. The electronics giant will take a first major step on Wednesday to separate its healthcare unit from the rest of the company. PHOTO | FILE 

By Reuters

In Summary

• This would enable the subsequent legal separation of the healthcare division as a whole from the rest of the company.
• Siemens fears large investments will be needed in the high-margin business as new diagnostic methods and new rivals such as Samsung heighten competition with traditional rivals like General Electric and Philips.

German engineering group Siemens will take a first major step on Wednesday to separate its 14 billion-euro ($18 billion) healthcare unit from the rest of the company, two sources with knowledge of the matter said on Tuesday.

Siemens fears large investments will be needed in the high-margin business as new diagnostic methods and new rivals such as Samsung heighten competition with traditional rivals like General Electric and Philips.

READ: Philips technology boosts healthcare in Kiambu

Siemens' supervisory board will decide on Wednesday on the creation of new healthcare country units, including in Germany, capable of holding licenses for products such as imaging equipment independently of Siemens AG, said one of the sources.

This would enable the subsequent legal separation of the healthcare division as a whole from the rest of the company. The Munich-based company declined to comment.

Shares in Siemens turned positive on the news and were trading up 0.8 per cent at 89.75 euros by 1119 GMT.

Siemens, once a conglomerate that made everything from mobile phones to light bulbs to steam turbines, has been shedding its consumer businesses over the past several years to focus on industrial electrification, automation and digitalization.

It has sold some businesses in the past, including Siemens Mobile and its stake in Fujitsu-Siemens computers. Most recently, it spun off lighting company Osram to existing shareholders.

Siemens' healthcare division, which makes equipment for medical imaging, in-vitro diagnostics and clinical IT systems, accounted for 18 per cent of 2013 sales. It had a core profit margin of 20 per cent, the highest of Siemens' four divisions.

The division also includes hearing aids, whose 2 billion-euro sale to private equity firm EQT is also expected to be agreed by he supervisory board on Wednesday.