Siemens Healthineers launches IPO, raising $5.2B

By Brian Casey, AuntMinnie.com staff writer

March 16, 2018 -- The Siemens Healthineers division of German industrial conglomerate Siemens AG launched its long-awaited initial public offering (IPO) today, raising $5.2 billion U.S. (4.24 billion euros). Shares in the new company immediately rose 6% on the Frankfurt Stock Exchange.

Siemens issued 150 million shares of Siemens Healthineers, priced at 28 euros ($34 U.S.) per share. The price was in the bottom half of a range between 26 and 31 euros ($32 and $38) per share that had been expected, according to an article in Bloomberg. The new level values the company at 28 billion euros ($34 billion), versus an expected valuation of 35 billion euros ($43 billion).

Despite the lower price, Siemens AG CEO Joe Kaeser said the company was pleased with the offering, according to an article in Financial Times. Kaeser told the newspaper he believes the health division is "fairly priced" and the IPO price gives the stock room to grow.

The IPO is the conclusion of a process that began in November 2016, when Siemens AG announced it planned to spin off Siemens Healthineers as a separate business while retaining a majority stake in the firm. After today's IPO, Siemens AG still owns 85% of the company.

As a standalone company, Siemens Healthineers is expected to have more flexibility in forging its way in the medical device market. The firm can now use its own stock for mergers and acquisitions within healthcare, for example, which is expected to make such deals cheaper than using cash or debt. Siemens Healthineers can also now attract interest from investors who want to buy shares in pure-play medical device firms, rather than investing in a company like Siemens AG that has a range of operations outside healthcare.

And Siemens Healthineers is still a massive company on its own, despite moving out from under its corporate parent. The company posted revenue of 13.8 billion euros ($17.02 billion) in 2017, with an adjusted profit of 2.5 billion euros ($3.08 billion). The company has an adjusted profit margin of 18%.


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