In another sign that Siemens seems to be pivoting away from healthcare and toward the energy industry, the German conglomerate announced the sale of its hearing aid business for $2.68 billion to private equity firm EQT Partners and Santo Holding, the investment company of Germany's Strüngmann family.
EQT will hold a majority stake, with Santo holding a smaller share. Siemens will keep a preferred equity investment of €200 million ($248.4 million) in the unit, dubbed Siemens Audiology Solutions. Siemens says the unit earned revenue of €693 million ($860.8 million) in fiscal year 2014, and reported earnings before interest, taxes, depreciation and amortization of €145 million ($180.1 million).
An IPO was planned earlier this year, but was shelved due to declining equity markets. Bloomberg reported that a deal with EQT was likely in October. The sale is expected to close in the first quarter of 2015. EQT will then add another healthcare company to its investment portfolio, which boasts 9 medical players, as well as 8 exited companies.
Siemens' prior divestments of its hospital information-technology and microbiology businesses have lead to speculation that the company could sell its entire healthcare unit, best known for its imaging devices, the Wall Street Journal says. And in May the company announced that it's managing its entire healthcare business as a standalone entity, something that is often done to set the stage for a future separation.
CEO Joe Kaeser said during today's earnings call that the healthcare unit will remain part of the conglomerate and operate as a "company within the company." The move to manage the unit separately was made "to give it greater freedom of action," reports the Wall Street Journal.
Siemens Healthcare reported a profit of €611 million ($759 million) in the quarter including a €44 million ($54.7 million) charge. The number was down €5 million ($6.2 million) year-over-year. The unit's revenues were up 3% to €3.58 billion ($4.45 billion), although the imaging and therapy systems business showed weakness in China, the earnings release says. But revenue growth in the diagnostics business came mainly from China, and rose 1% to €1.04 billion.
In September Siemens announced its plans to purchase American oil equipment company Dresser-Rand Group for $6.4 billion, pointing to where the company's long-term interests lie.