Engineering firm Siemens Ltd announced Friday the sale and transfer of its healthcare business to Siemens Healthcare, a subsidiary of its parent Siemens AG, for Rs 3,050 crore.
The transaction approved as going concern on a slump sale basis is expected to close by July 1, 2016, to regulatory, statutory and shareholder approvals. Valuation for the same was undertaken by Deloitte Touche Tohmatsu India and KPMG India.
The release stated that through this transaction, Siemens AG aims to strengthen its focus on Healthcare in India. It also stated that out of the Rs 3,050 crore consideration, Siemens India will distribute 50 percent as dividend to its shareholders after providing for necessary taxes such as capital gains and dividend distribution tax. The rest will be retained by the company to meet its capital expenditure.
Sunil Mathur, Managing Director and Chief Executive Officer of Siemens Ltd., said in the statement that this transaction is part of Siemens AG's global strategy of managing its healthcare business under a separately-managed company. "As there are limited synergies between the Healthcare and other businesses of Siemens Ltd, this transaction will enable Siemens Ltd to increase its focus on, and capital allocation to Power Generation, Transmission and Distribution, Mobility, Industrial Automation and Smart Cities segments while enabling Siemens AG to further strengthen its focus on the Healthcare segment in India, by aligning it with its global strategy and management framework," he said.
According to its "Investor/Analyst Presentation" submitted to BSE as corporate filing, "87 percent of Siemens Ltd's Healthcare revenues are derived from imported products, catering primarily from high-end market." Siemens Serves 1.4 percent of the healthcare market in India with medical devices being 4.4 percent of the total market.
The healthcare business accounted for 13.6 percent revenues in FY15, though its contribution to earnings before interest and tax (EBIT) was only 8.5 percent.
On Friday, Siemen Ltd closed at the BSE at Rs 1,044.20 down Rs 6.20 or 0.59 percent.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]