Cerner Corporation ( CERN ) announced the receipt of an important regulatory clearance from the U.S. Federal Trade Commission, bringing it a step closer to acquiring Siemens Health Services − the health care information technology business of German industrial conglomerate Siemens AG.
The U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, as amended, in connection with the company's purchase of the assets of Siemens Health Services.
The early termination of the HSR waiting period satisfies one of the conditions required for the closing of the pending acquisition. Meanwhile, the transaction remains subject to other customary closing conditions and is still expected to close in the first quarter of 2015.
On Aug 5, Cerner revealed its plans to acquire Siemens Health Services for a whopping $1.3 billion in cash. Following the acquisition announcement, shares of Cerner adopted an uptrend, rising nearly 6.9% till the last closing session.
Cerner proposes to acquire Siemens Health Services as means to advance industry innovation, combine complementary client bases and bring together research and development (R&D) investments.
Post-acquisition, the combined entity will have 20,000 associates in more than 30 countries, and 18,000 client facilities, including some of the largest health care organizations in the world.
The acquisition of Siemens Health Services will lift Cerner's annual revenues from $3 billion in 2013 to more than $4.5 billion this year. Both the companies will have an annual R&D investment of $650 million.
Furthermore, the acquisition is expected to be accretive to Cerner's adjusted earnings per share by more than 15 cents in 2015 and over 25 cents in 2016.
As part of the deal, Cerner and Siemens AG will form a strategic alliance, combining Cerner's health IT leadership and Siemens' strengths in medical devices and imaging. Both the companies will invest up to a combined $100 million to bring new solutions to market for the purpose of enhancing workflows and clinical outcomes.
Currently, Cerner carries a Zacks Rank #3 (Hold). Better-ranked stocks include Merge Healthcare Incorporated ( MRGE ) and Omnicell, Inc. ( OMCL ) in the medical information systems industry and Alphatec Holdings, Inc. ( ATEC ) in the medical instruments industry. While Alphatec sports a Zacks Rank #1 (Strong Buy), both Merge Healthcare and Omnicell carry a Zacks Rank #2 (Buy).
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