* Siemens pays 1.74 bln stg for Invensys Rail
* Invensys to return 625 mln stg to investors
* Siemens to divest baggage handling, postal sorting ops
* Siemens says to spin off 80.5 pct of Osram
* Siemens says expects to return to profit growth in 2014
(Adds analyst comments, 2014 profit outlook from regulatory
FRANKFURT, Nov 28 Germany's Siemens AG
struck a deal to buy Invensys' rail business
for 1.74 billion pounds ($2.8 billion) as part of a major
overhaul to focus on its core expertise and boost productivity.
The deal will give Siemens access to Invensys' customers in
Britain, Spain, the United States and Australia and will result
in synergies of more than 100 million euros ($129.10 million) by
2018, Siemens said on Wednesday.
Shares in Invensys closed 27 percent higher at 290 pence in
London as the British company said the sale of Invensys Rail,
which makes signalling systems, would allow it to return 625
million pounds, or 76 pence per share, to its investors.
Siemens, Germany's most valuable company, announced plans
earlier this month to save 6 billion euros over two years and
raise productivity to close a gap with rivals such as ABB
and General Electric.
As part of the programme, it aims to divest businesses that
do not generate competitive returns and buy assets that can
bolster its core businesses, such as industry automation.
But some analysts said they saw the deal for Invensys Rail
as expensive, with Siemens paying about 15 times estimated 2013
operating profit for the business.
"If ever there was a signal to the market on what (the
savings programme) 'Siemens 2014' means, this is it: the
portfolio reinforcement is not going to be cheap," Bernstein
Research analyst said.
Analysts at Bank of America Merrill Lynch said they
suspected Siemens had agreed to the deal partly to prevent its
rivals from getting their hands on Invensys Rail.
Siemens, which makes products ranging from fast trains and
gas turbines to hearing aids, also said on Wednesday it was
divesting its baggage handling, postal and parcel sorting
businesses - with total annual revenue of about 900 million
euros - and would give 80.5 percent of its Osram lighting unit
to shareholders in a planned spin-off.
Chief Executive Peter Loescher declared two years ago that
Siemens had become a "normal company" and that years of
restructuring and volatility were over. But he recently warned
that the company had to make deep cuts to stay competitive.
Aside from spinning off most of Osram, the world's No.2
lighting company after Philips, Siemens is selling
businesses including its solar and waste water treatment units.
The deals are taking some of the sheen off Siemens' push to
become a major player in green technology. The company said in a
regulatory statement published late on Wednesday that it has
become much more challenging to reach its goal of growing
revenue from its Environmental Portfolio to more than 40 billion
euros in fiscal 2014 from 33 billion euros in 2012.
Excluding major portfolio changes, Siemens sees its profit
from continuing operations returning to strong growth in its
fiscal year through September 2014, it said in the statement.
That is after an expected decline in 2013 profit to 4.5-5.0
billion euros, including 1 billion euros of charges related to
the savings programme, from 5.18 billion euros last year.
($1 = 0.7746 euros)
($1 = 0.6257 British pounds)
(Reporting by Maria Sheahan; Additional reporting by Rhys
Jones; Editing by Mike Nesbit, Helen Massy-Beresford and Gunna