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Siemens Sells Healthcare IT Unit to Cerner in $1.3B Deal

Tickers in this article: CERN GE

BERLIN (The Deal) -- Germany's Siemens on Tuesday agreed to sell its hospital information systems division to Cerner as CEO Joe Kaeser makes good on a promise to focus the German industrial giant on businesses including automation and power generation equipment.

Cerner agreed to pay $1.3 billion for the division, which is based in Malvern, Pa. and helps hospitals move administrative and patient record-keeping into the digital era.

Digitizing patient records may help doctors better treat individual patients by flagging conflicting medications or past conditions. It also helps track statistical trends in illnesses, a key component to President Obama's healthcare overhaul.

The unit does not include Siemens' digital medical imaging and supporting businesses.

"An increasing number of country-specific requirements, such as resulting from U.S. healthcare reform, make it increasingly challenging to achieve sufficient scale effects. Going forward we will focus on the development of information systems that support our businesses in laboratory diagnostics as well as imaging and therapy," said Hermann Requardt, who is CEO of Siemens Healthcare, in a statement.

It's the second medical sale this year for Siemens. In July the Munich-based company agreed to sell its clinical microbiology business to Danaher Corp.'s Beckmann Coulter Inc. No price was given in that sale and Siemens said it didn't expect to book a gain as part of the divestment.

CEO Kaeser, formally the company's top finance man, has been working to boost the company's power generation business and this year attempted unsuccessfully to keep General Electric away from France's Alstom by lodging a competing bid for the French company's power-generation equipment assets. Still, he did manage to buy nearly all of Rolls-Royce Holdings plc's energy assets for $1.3 billion.

Despite selling the unit to Cerner, both Siemens and Cerner said they would jointly continue to develop the electronic records system for a decade -- and contribute $50 million over three years to projects they both can benefit from.

Greenhill & Co. acted as Cerner's financial adviser with counsel coming from a Latham & Watkins LLP team of Jim Beaubien, Harald Selzner, Thomas Fox, Ulrich Wuermeling, Thies Deike, Joachim Grittmann, Norma Studt and Christian Engelhardt.

Siemens turned to JPMorgan Chase & Co. for financial advice with Crowell & Moring's Olivier Antoine and Clifford Chance LLP's Nicole Englisch, Jan Wrede and Matthias Wahl for counsel.