By Christopher Alessi
BERLIN--German engineering giant Siemens AG said Thursday that
it would sell its hearing-aid business to private-equity firm EQT
Partners and Santo Holding, the investment arm of Germany's
Strüngmann family, in a deal valued at EUR2.15 billion ($2.68
billion).
EQT will acquire a majority stake in Siemens Audiology
Solutions, a division of Siemens Healthcare, with Santo Holding
acting as a minority co-investor. Siemens will retain a
preferred-equity investment of EUR200 million in the business.
Audiology Solutions posted EUR693 million in revenue for
2014.
EQT's goal is to position the hearing-aid business for an
eventual initial public offering, Marcus Brennecke, EQT's partner
for German operations, told The Wall Street Journal. "It's an
acquisition for growth, not a cost-cutting effort," he said.
Siemens had initially announced plans in May to publicly list
the company. The announcement came as Siemens reported a 44% jump
in net profit for the fourth quarter, boosted by strong growth in
its industry and transportation divisions, as well as a recovery
from high one-off restructuring charges during the same period last
year. But the company issued a cautious growth forecast for 2015,
tempered in part by geopolitical tensions and a weakening European
economy.
Net profit for the three months ended Sept. 30 was EUR1.45
billion, up from EUR1.01 billion a year earlier and in line with
analysts' expectations. Analysts had forecast net profit of EUR1.49
billion, according to a poll by the Journal.
New orders rose 2%, adjusted for currency and portfolio effects,
to EUR20.73 billion and revenue rose by 1% to EUR20.62 billion,
weighed down by declining growth in its energy business.
Siemens expects revenue to remain flat next year, with basic
earnings-per-share forecast to increase by 15%, compared with EPS
growth of 25% in 2014. The company proposed a shareholder dividend
of EUR3.3 a share.
The sale of the audiology solutions unit comes on the heels of
the company's recent decisions to shed two other parts of its
health care business, hospital information-technology and
microbiology.
The planned divestments have contributed to speculation that
Chief Executive Joe Kaeser could dispose entirely of the company's
healthcare business--its most consistently profitable operation--as
he moves to sell noncore businesses and focus more on energy.
Mr. Kaeser last month separated Siemens Healthcare operationally
from the rest of the company, in a move analysts have said could
allow him to more easily dispose of it through a spinoff to
shareholders, an IPO or an outright sale.
Mr. Kaeser insisted on Thursday that the healthcare business
would remain part of Siemens as a "company within the company." But
he also announced plans to reorganize Siemens Healthcare as a
separate legal entity in Germany and in other countries to "give it
greater freedom of action."
Siemens Healthcare's fourth-quarter profit dropped by 1% to
EUR611 million from EUR616 million last year, hurt by lower
earnings in its imaging and therapy systems businesses. Healthcare
revenue and new orders rose by 3% and 1%, respectively.
Siemens's overall fourth-quarter growth was held back by weak
results in its energy business. The energy sector reported a 28%
decline in profit, hurt by losses in the wind power division, and a
5% fall in orders, in-part due to reduced sales of large gas
turbines in the Americas.
Mr. Kaeser has moved to bolster the company's energy operations
over the past year through planned acquisitions of U.S.-based oil
equipment manufacturer Dresser-Rand Inc. and the energy business of
the U.K.'s Rolls-Royce Holdings PLC.
However, in June Siemens lost out to U.S.-based rival General
Electric Co. in a battle to acquire the energy assets of France's
Alstom SA.
Lisa Davis, the company's new, Houston-based energy head, told
reporters Thursday that the still-incomplete merger could pose
further challenges for growth in Siemens's energy business.
"We see a more competitive energy market if the GE-Alstom deal
goes through," Ms. Davis said.
Write to Christopher Alessi at christopher.alessi@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires