Siemens plans public listing of healthcare business

Thu Nov 10, 2016 6:46am EST
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By Georgina Prodhan

MUNICH (Reuters) - Germany's Siemens (SIEGn.DE: Quote) said it planned a public listing of its $15 billion healthcare business, lifting its shares to a 16-year high as investors hoped for an injection of capital that would lift its valuation while funding future investments.

Healthcare is the most profitable business of the trains-to-turbines group but will need large investments in coming years as the industry shifts from the simple selling of equipment to managing health more broadly.

Although Siemens gave no details on when or how much of the business it planned to float, the announcement was enough to outweigh a cautious outlook for the coming year.

Siemens shares touched a 16-year high of 109.40 euros and by 0516 ET were trading up 4.2 percent at 108.90 euros, the second-biggest gainers in a 1 percent-higher German blue-chip index .GDAXI on Thursday.

"With a listing, Siemens believes it will be better able to build positions in identified growth fields (where multiples will be much higher…)" wrote Barclays capital-goods analysts, who rate Siemens "equal weight/neutral".

The move, which follows a carve-out of the business from the rest of the group, takes Siemens in a different direction from global rivals General Electric (GE.N: Quote) and Philips (PHG.AS: Quote), who are focusing more on healthcare as they shed financial services and lighting respectively.

Siemens has the past years quit the semiconductor, lighting, automotive and communications businesses, among others, seeking to minimize the discount to its valuation that comes from being a conglomerate and to focus on its core strengths of factory automation and energy technology.

That leaves it mainly supplying big-ticket industrial goods, a market vulnerable to political uncertainty that discourages manufacturers from making investments.   Continued...

Siemens CEO Joe Kaeser attends the annual news conference in Munich, Germany November 10, 2016. REUTERS/Michaela Rehle