Siemens paves way to hive off healthcare -sources

[November 04, 2014]  By Jens Hack and Georgina Prodhan

FRANKFURT (Reuters) - 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.

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 percent at 89.75 euros by 1119 GMT (6.19 a.m. EST).

Siemens, once a conglomerate that made everything from mobile phones to lightbulbs 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 percent of 2013 sales. It had a core profit margin of 20 percent, the highest of Siemens' four divisions.

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

(Reporting by Georgina Prodhan; Editing by Christoph Steitz/Keith Weir)

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