* Deal comes as Siemens overhauls its business
* Siemens says hospital IT ops failed to keep up with rivals
* Cerner to pay cash for hospital IT business
* Deal to close in Q1
(Adds details on assets sold, financial advisers, strategic
By Maria Sheahan
FRANKFURT, Aug 5 German engineering group
Siemens plans to sell its hospital IT business to
Cerner Corp, a U.S. provider of healthcare IT services,
for $1.3 billion in cash, the two companies said late on
The deal comes as Siemens Chief Executive Joe Kaeser seeks
to focus the group, Germany's second-biggest company by market
value, on its most promising businesses to close a gap with more
profitable competitors such as Switzerland's ABB and
U.S.-based General Electric.
Siemens said it was selling its hospital information system
business, which has about $1.2 billion of annual sales and
around 5,000 client facilities in over 40 countries, because it
failed to consistently keep up with competitors.
"Additionally, an increasing number of country-specific
requirements, such as (those) resulting from U.S. healthcare
reform, make it increasingly challenging to achieve sufficient
scale effects," Hermann Requardt, CEO of Siemens's Healthcare
division, said in a statement.
Instead, Siemens said it would focus its efforts in the
healthcare IT area on the development of systems for its
laboratory diagnostics as well as imaging and therapy
Siemens, whose products range from gas turbines to
high-speed trains and industrial automation software, has sold
or spun off a raft of assets over the past couple of years,
including its light bulb making business Osram and
parts of its water technology business. This month, it agreed to
sell its clinical microbiology business to Beckman Coulter, a
subsidiary of Danaher Corp.
At the same time, it has bought some businesses, such as a
turbines business from Rolls-Royce, to bolster its energy
and industrials divisions. In June, it lost out in a bidding war
for Alstom's energy assets that would have seen it buy
the French peer's gas turbines business for 4.3 billion euros in
Cerner said a combination of Siemens's hospital IT business
with its own operations would create an entity with $4.5 billion
of annual revenue and $650 million of annual investments in
research and development.
Siemens and Cerner also agreed on a strategic alliance to
jointly invest in projects integrating health IT with medical
technologies, each contributing up to $50 million.
Cerner said it expected the purchase of Siemens's assets,
which it will finance with cash on hand, to add 15 cents to its
adjusted per-share earnings in 2015.
JP Morgan advised Siemens on the deal, while Cerner was
advised by Greenhill & Co. The transaction is expected to close
in the first quarter of 2015.
(Reporting by Maria Sheahan; Additional reporting by Rohit T.
K. in Bangalore; Editing by Sriraj Kalluvila, Victoria Bryan and