The Indian arm of Siemens AG on Friday said it has approved the sale and transfer of its healthcare undertaking to the German company's subsidiary—Siemens Healthcare Pvt Ltd—for Rs 3,050 crore ($453.65 million).
“This transaction follows Siemens AG’s global strategy of managing its healthcare business under a separately managed company," said Sunil Mathur, managing director and chief executive officer, Siemens Ltd, in a statement.
In May 2014, Siemens AG had announced an internal reorganisation into nine divisions and one independently operated unit, healthcare. Siemens Healthcare operates under a separate company within Siemens AG with an independent management team.
In India, the sale of its healthcare unit was foreseen to enable Siemens Ltd to focus on other business areas.
"As there are limited synergies between the healthcare and other businesses of Siemens Ltd, this transaction will enable... Siemens AG to strengthen its focus on the healthcare segment in India, by aligning it with its global strategy and management framework,” Mathur said.
Apart from healthcare, Siemens Ltd is focused on other areas including power generation, transmission and distribution, mobility and industrial automation.
Currently, 87 per cent of Siemens Ltd’s healthcare undertaking's revenues is derived from imported products, catering primarily to India's high-end medical devices market.
Siemens' India healthcare unit accounted for 13.6 per cent of total revenues in FY15.
GE and Philips are other major global players in the highly fragmented medical devices market.
The Indian medical devices market accounts for 4.4 per cent of the total healthcare industry, where domestic players are more of distributors than manufacturers.
Siemens Ltd has also decided to consider the distribution of 50 per cent of the sale consideration as a special dividend after accounting for capital gains and dividend distribution tax, at the first board meeting after the completion of the proposed transaction.
The transaction is expected to be closed on July 1, 2016 following regulatory, statutory and shareholder approvals.
Siemens Healthcare currently provides clinical, software development and delivery know-how for all Siemens healthcare business areas.
Shares of Siemens Ltd closed at Rs 1044.20 apiece on Friday, down 0.59 per cent in a flat market.