Siemens agreed a combined €18bn ($24.6bn) of deals on Wednesday, marking Peter Löscher’s first big moves since taking over as chief executive of the German engineering group last month, reports the FT.
Siemens agreed to sell VDO, its car-parts maker, to Germany’s Continental and bought Dade Behring, a US medical equipment supplier. Continental fended off competition from TWR of the US to secure VDO for €11.4bn, after Siemens abandoned plans to float the business.
Siemens simultaneously said it had agreed to buy Dade Behring for about $7bn (€5.06bn) in cash.
Mr Löscher hailed the twin transactions as an important sign of streamlining and said Siemens needed to get “faster, less complex and more focused”.
The deals were announced as Siemens reported third-quarter results that fell below market expectations, after which shares in Siemens dropped 6.4 per cent to €99.27.
Continental said it would pay €10.4bn in cash for VDO and in addition receive a €1bn tax break for which it would compensate Siemens.
The VDO divestment – initially a listing was planned – is seen as the first big test for Mr Löscher, who took over from Klaus Kleinfeld as chief executive in June.
Selling VDO outright was seen as the most lucrative option financially, but politically more risky, because of potential job losses at VDO under a new owner. Last year, Siemens’ management was fiercely criticised for the collapse of its former mobile handset division less than a year after it had sold it to BenQ of Taiwan.
The acquisition of Dade Behring, which makes clinical laboratory equipment, follows Siemens’ stated goal of boosting its healthcare business, which is one of three divisions earmarked as core activities along with energy and industrial automation.
Joe Kaeser, chief financial officer, said the balance of funds from the two transactions would be used to finance buying back a €2.4bn convertible bond and to pay off debt from previous acquisitions.
Deal Journal applauds the deal and says Siemens “has just reminded Stephen Schwarzman and Henry Kravis who the real masters of M&A are”. The $6.3bn all-cash price tag on the German company’s agreement to buy Dade Behring is “healthy, to put it mildly” and serves as a reminder that over time, corporations – “so-called strategic acquirers” – account for the majority of M&A activity, it concludes.