Siemens Plans $39 Billion Healthineers Stake Reduction via Shareholder Spin-Off

In a significant move that may reshape the landscape of Siemens AG's portfolio, the German engineering giant announced on November 12, 2023, its intent to reduce its 67% stake in Siemens Healthineers to 37% or below. This decision is part of a strategic spin-off where Siemens will distribute approximately 30% of its Healthineers shares to its shareholders, valued at an estimated €33.5 billion ($39.07 billion).

A Focus on Core Competencies

Siemens CEO, Roland Busch, indicated that this corporate maneuver aims to enhance focus on core areas such as factory and building automation, alongside its Mobility train-making segment. By divesting part of its Healthineers holdings, Siemens intends to sharpen its emphasis on technology, particularly in integrating hardware with artificial intelligence through software and digital initiatives.

The Strategic Spin-Off Explained

This direct spin-off is regarded as the most favorable approach for Siemens, allowing a gradual divestment from its initial 85% stake in Healthineers. The company already executed a partial sale, offloading 2% of its stake for approximately €1.45 billion earlier this year. Although this share transfer will not generate immediate funds for Siemens, it clearly delineates the path towards a more agile and focused operational model for both Siemens and Healthineers.

Healthineers' Response to the Spin-Off

Healthineers welcomed the announcement, viewing it as an opportunity to enhance its share price and mitigate uncertainty surrounding Siemens' intentions regarding its stake. CEO Bernd Montag reaffirmed this sentiment, stating, "We appreciate the clarity," signifying the importance of the spin-off for Healthineers’ operational independence as it seeks to navigate its future with greater autonomy.

Investor Sentiment and Market Implications

The news of the spin-off comes amid growing scrutiny from investors about Siemens’ stake in Healthineers. This strategic move is seen as a pivotal moment for Busch, who aims to consolidate Siemens' identity within its industrial operations. Notably, large shareholders had been advocating for Siemens to concentrate more on its industrial and building automation businesses. Maria Mihaylova, a fund manager at Union Investment—one of Siemens' top 20 investors—applauded the spin-off, calling it an essential step forward.

Future Considerations and Timeline

While Siemens has defined its objectives, no specific timeline has been disclosed for the spin-off process. The spin-off relies on approvals from both Siemens’ shareholders and those at Healthineers, which may necessitate an extraordinary general meeting. Furthermore, Siemens awaits consent from the German tax authorities, an essential step, especially since opting for a spin-off could vastly reduce any potential tax burdens associated with distributing shares as a dividend in kind.

In conjunction with this announcement, Siemens also revealed that CFO Ralf Thomas will retire at the end of fiscal 2026, paving the way for Veronika Bienert, the CEO of Siemens Financial Services, to succeed him. Despite his planned departure, Thomas, aged 64, is set to maintain a role on Healthineers' supervisory board post-retirement, ensuring