FRANKFURT Germany's Siemens AG (SIEGn.DE) struck a deal to buy Invensys' ISYS.L 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 U.S. 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 rail signaling 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 ABBN.VX and General Electric (GE.N).
As part of the program, it aims to divest businesses that do not generate competitive returns and buy assets that can bolster its core businesses, such as industry automation.
Siemens, which makes products ranging from fast trains and gas turbines to hearing aids, 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.
Siemens has been looking to offload Osram, the world's second-biggest lighting company after Philips (PHG.AS), as it shies away from investing to keep up with a shift to more energy-efficient lighting technologies such as light-emitting diodes (LEDs).
So far, only two of Osram's 44 factories in 16 countries make LEDs - Regensburg, Germany and Penang, Malaysia - but the company is building a new plant in China to increase its firepower in the fast-growing Asian market.
Meanwhile, Asian rivals such as South Korea's LG Electronics (066570.KS) and Samsung Electronics (005930.KS) have built up capacity, driving down prices.
Following the spin-off, in which each Siemens shareholder will receive one Osram share for every 10 Siemens shares they hold, Siemens will be left with a 17 percent stake in Osram. The Siemens Pension Trust will have 2.5 percent.
Analysts see the value of Osram at between 3 billion and 5 billion euros, but that could change when the company publishes financial details in the prospectus for its spin-off on December 7.
Sources have told Reuters that Osram will announce plans on Thursday for a massive restructuring program to get its business into shape for a future without parent Siemens.
($1 = 0.7746 euros)
($1 = 0.6257 British pounds)
(Reporting by Maria Sheahan; Editing by Mike Nesbit and Helen Massy-Beresford)