Mumbai:Depreciation in the sale business has lead the Board of Directors of Siemens ltd to approve the transfer and sale of its Healthcare undertaking to Siemens Healthcare Private Ltd, a subsidiary of Siemens AG for INR 35,500 million. The purchase will proceed depending upon essential regulatory, statutory and shareholder approvals.
The consideration for the proposed transaction recommended by the Audit Committee would be based on the valuation of two independent valuers-– Deloitte Touche Tohmatsu India LLP and KPMG India Private Limited. Citigroup Global Markets India Pvt. Ltd. is acting as the transaction advisor to Siemens Limited.
According to India Infoline News Service key rationale behind the proposed transaction being Government’s preference for locally manufactured products, growth being driven by Tier II / III cities, where preference is for value products, dependency of Siemens Ltd.’s Healthcare undertaking on Siemens AG and its subsidiaries for products and technical know-how, localization of products requiring significant long-term investments and solutions alignment with global strategy and management framework.
Some of the other reasons for transfer of the Healthcare wing of Siemens to Healthcare Private ltd include: Healthcare, globally , is a separately managed unit which allows increased flexibility, greater entrepreneurial freedom and faster decision making to help grow India Healthcare segment independently.
According to Sunil Mathur, Managing Director and Chief Executive Officer, Siemens Limited, “This transaction, follows Siemens AG’s global strategy of managing its Healthcare business under a separately-managed company. Over 85% of Siemens Ltd Healthcare revenues are currently derived from products imported from Siemens AG. Significant Management focus, including investments will be needed in finding appropriate products and solutions to meet the growing demands of the Indian market. 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.”
The shareholders of Siemens ltd share would also also stand to benefit, if the transaction succeeds according to Mr. Mathur. Some of the benefits include, limited synergies between Healthcare and other segments, enhanced focus, growth of capital allocation in segments of power generation, transmission & distribution, mobility, industrial automation and smart Cities, proposed transaction margin being accretive for Siemens Ltd.
Last but not the least, the board of director’s decision to consider the distribution of 50% of the sale consideration as reduced by applicable capital gains tax and dividend distribution tax, as a special dividend.