Siemens to sell part of Healthineers stake in IPO

Siemens will press ahead with an initial public offering of its healthcare unit, as Chief Executive Officer 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, 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 (or $12.4 billion) by selling as much as 25 percent of the business, valuing Healthineers at as much as 40 billion euros, people familiar with the matter said in January. The so-called “intention to float” announced this week is typically followed by a formal IPO prospectus, which will include details of the sale within the following month.

“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 management board. “We expect the business to capitalize on its strengths even more effectively after the listing.”

The IPO is part of a broad overhaul by Kaeser, who merged Siemens’s wind power unit with Spanish competitor Gamesa in 2017 and is combining the company’s train business with that of Alstom SA. The new holding-company structure, giving business units more independence, has been described by the CEO as shifting Siemens from being an aircraft carrier to a nimble fleet of ships.

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The company first said in November 2016 that it planned an IPO of a minority stake in the unit, which makes imaging and diagnostic equipment used in hospitals, medical practices and labs. Competitors include General Electric and Royal Philips. Healthineers will remain core to the parent company and will be consolidated in its financial accounts, Siemens said Monday.

Healthineers has consistently had a large presence at U.S. trade shows, such as the recent Radiological Society of North America conference and exhibit in Chicago.

In the past year, Healthineers appeared to be expanding its reach beyond imaging devices to the software systems that support them. For example, last April the Siemens unit expanded its population health management product line with a planned acquisition of radiology vendor Medicalis for an undisclosed sum. Medicalis sold imaging workflow software, a referral management platform to help integrated delivery systems decrease consumer leakage to another healthcare system, and radiology clinical decision support software.

The health business had revenue of 13.8 billion euros in fiscal 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.