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Abu Dhabi, UAEMonday 24 September 2018

Siemens set for biggest IPO in Germany since 1996

Health-care unit offering moving ahead after a stumble in global equity markets beginning in late January led some companies to cancel planned IPOs

Siemens CEO Joe Kaeser is pushing ahead with IPO. Ralph Orlowski/Reuters
Siemens CEO Joe Kaeser is pushing ahead with IPO. Ralph Orlowski/Reuters

Siemens will press ahead with an initial public offering of its healthcare unit as chief executive 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. While Siemens did not give details on the size of the sale, it is likely to be one of the biggest equity offerings ever in Germany. Siemens aims to raise as much as €10 billion (Dh45.53bn) by selling up to 25 per cent of the business, valuing Healthineers at as much as €40bn, 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 Mr Kaeser, who also merged the wind power unit with Spanish competitor Gamesa in 2017 and is combining the company’s train business with that of Alstom. According to people familiar with the matter, Siemens also plans to sell the Flender mechanical drives operation. Mr Kaeser has likened the moves as shifting the company from being an aircraft carrier to a nimble fleet of ships.

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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 last year.

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 per cent from its January peak and has since recovered some of the losses.

In November 2016, Siemens announced 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 and Royal Philips. Healthineers will remain core to the parent company and will be consolidated in its financial accounts, Siemens said on Monday.

Shares of Siemens rose 1 per cent to close Friday at €111.18. The stock has fallen 4.3 per cent this year, valuing the company at €94.5bn.

The health business had revenue of €13.8bn in 2017 and adjusted profit of €2.5bn, equal to a profit margin of about 18 per cent. Siemens Healthineers will aim to pay a dividend of 50 per cent to 60 per cent of net income, the company said.

Deutsche Bank, Goldman Sachs and JP Morgan are arranging the sale, with BNP Paribas, BofA Merrill Lynch, Citigroup and UBS Investment Bank as joint bookrunners.

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