Siemens to sell health­care busi­ness

The Pak Banker - - COMPANIES/BOSS -

En­gi­neer­ing firm Siemens Ltd on Fri­day an­nounced the sale and trans­fer of its health­care busi­ness to a sub­sidiary of its par­ent Siemens AG for Rs.3,050 crore. The Siemens board of di­rec­tors ap­proved the sale and trans­fer of the health­care un­der­tak­ing as a go­ing con­cern on a slump sale ba­sis, af­ter ob­tain­ing the req­ui­site reg­u­la­tory, statu­tory and share­holder ap­provals, to Siemens Health­care Pvt. Ltd.

A slump sale is the trans­fer of one or more un­der­tak­ings for a lump-sum con­sid­er­a­tion with­out val­ues be­ing as­signed to in­di­vid­ual as­sets and li­a­bil­i­ties. The con­sid­er­a­tion for the pro­posed trans­ac­tion, rec­om­mended by the au­dit com­mit­tee, is based on the val­u­a­tion done by two in­de­pen­dent val­uers- Deloitte Touche Tohmatsu In­dia Llp and KPMG In­dia Pvt. Ltd, Siemens said in a state­ment.

Cit­i­group Global Mar­kets In­dia Pvt. Ltd is act­ing as the trans­ac­tion ad­viser to Siemens, which is listed on In­dian bourses. Su­nil Mathur, man­ag­ing di­rec­tor and chief ex­ec­u­tive of­fi­cer, Siemens, said this trans­ac­tion fol­lows par­ent Siemens AG's global strat­egy of man­ag­ing its health­care busi­ness un­der a sep­a­rate com­pany.

"Over 85% of Siemens' health­care rev­enues are cur­rently de­rived from prod­ucts im­ported from Siemens AG. Sig­nif­i­cant man­age­ment fo­cus, in­clud­ing in­vest­ments will be needed in find­ing ap­pro­pri­ate prod­ucts and so­lu­tions to meet the grow­ing de­mands of the In­dian mar­ket," Mathur said. "As there are lim­ited syn­er­gies be­tween the health­care and other busi­nesses of Siemens Ltd, this trans­ac­tion will en­able Siemens Ltd to in­crease its fo­cus on, and cap­i­tal al­lo­ca­tion to power gen­er­a­tion, trans­mis­sion and dis­tri­bu­tion, mo­bil­ity, in­dus­trial au­to­ma­tion and smart cities seg­ments while en­abling Siemens AG to fur­ther strengthen its fo­cus on the health­care seg­ment in In­dia, by align­ing it with its global strat­egy and man­age­ment frame­work," Mathur said. The board said the par­ent has de­cided to of­fer 50% of the sale pro­ceeds, af­ter ap­pli­ca­ble cap­i­tal gains tax and div­i­dend dis­tri­bu­tion tax, as a spe­cial div­i­dend.

"Siemens is at it again, sell­ing off busi­nesses to its par­ent," said Shri­ram Subra­ma­nian, founder of InGovern Re­search Ser­vices, a proxy ad­vi­sory firm. "Val­u­a­tion of the busi­ness needs to be closely scru­ti­nized by in­vestors given that Siemens has a habit of short-chang­ing in­vestors. It isn't clear as to why there can­not be fo­cus on health­care sec­tor as a busi­ness divi­sion within the listed com­pany," Subra­ma­nian said. Mathur de­nied any such mo­tive be­hind the move and said that the com­pany en­gaged two firms for valu­ing the busi­ness.

He pointed out that Siemens Ltd's health­care un­der­tak­ing is de­pen­dent on the par­ent and its sub­sidiaries for prod­ucts and tech­ni­cal know-how while re­quir­ing sig­nif­i­cant long-term in­vest­ments for lo­cal­iza­tion of prod­ucts and so­lu­tions.

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