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Siemens' Microbiology Unit Up for Sale? - Analyst Blog

Posted
3/13/2014 5:00:00 PM
By: Zacks.com
Referenced Stocks:BAYRY;BX;CG;SI

According to a Bloomberg report, diversified electronics goods manufacturer Siemens AG ( SI ) is contemplating the sale of its microbiology unit. This is part of Siemens' restructuring strategy to stop the slide in its profitability. The move is also intended to bring into renewed focus its core businesses, which command a significant market share, unlike the microbiology unit that has a smaller pie of the market.

The microbiology unit supplies equipment for bacterial identification and antibiotic susceptibility testing. The division entails significant investments in R&D on a recurring basis to remain competitive. Amid stiff competition from other established players, such investments fail to generate healthy ROI. Not surprisingly, the company is probably thinking on the lines of divesting the unit altogether.

Siemens had expanded its healthcare division in 2006 and 2007 through a string of acquisitions. The company splurged about 11 billion euros in an acquisition spree by buying Diagnostic Products Corp., Bayer AG 's ( BAYRY ) diagnostics unit and Dade Behring Holdings Inc.

Siemens has reportedly hired investment banks to tap the market and seek potential buyers that could fetch anywhere between $300 million and $600 million. Even buyout financial firms like The Blackstone Group L.P. ( BX ) and The Carlyle Group LP ( CG ) have joined the fray of probable bidders for the likely sale. However, Siemens as well as Blackstone and Carlyle has refused to comment on the issue.

Siemens Healthcare, of which the microbiology unit is a part, is one of the leading solutions providers to the medical industry. Its product portfolio ranges from hearing instruments, diagnostic imaging systems, therapy equipment, and intensive care units to clinical and administrative IT solutions

Siemens, the parent company, is a German industrial conglomerate with interests in information services, automation and controls, medical equipment, power generation, transportation systems, automotive electronics, and lighting.

Siemens currently has a Zacks Rank #3 (Hold).



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