Siemens to Sell its Stake in Draeger Medical

Siemens (Munich, Germany) will sell its 25% stake in Draeger Medical (Lubeck, Germany) to majority shareholder Draegerwerk Verwaltungs (Draeger; Lubeck, Germany), with proceeds from the buyback estimated to be at least some EUR 250 million.

According to the details of the agreement, ownership of the medical engineering company will then be fully transferred to Draeger, a step decided upon jointly by both Siemens and Draeger to reduce complexity on both sides. Fully owning Draeger Medical, which produces anesthesia, monitoring and ventilation gear for hospitals, will reduce costs by as much as EUR 15 million a year by bundling procurement and by reducing administrative costs. The managing board of Draeger, as personally liable shareholders of Draeger, and the managing board of Siemens have agreed to the transaction, which is still subject to regulatory approval.

The sale proceeds include cash, credit, and option components. After completion of the transaction, Siemens will receive EUR 175 million in cash, and Siemens will provide Draeger with credit for a further EUR 68.5 million. A five-year option agreement has also been reached, which will enable Siemens to receive additional proceeds of up to EUR 50 million, depending on the development of the Draeger preferred share; the option is currently worth EUR 6.5 million.

"Wherever it benefits our customers, we will also in the future continue and develop the good cooperation between our companies. This applies in particular to technological solutions at the interface between diagnosis and therapy,” said Hermann Requardt, CEO of Siemens' healthcare sector.

"Purchasing this stake at an acceptable price will boost group earnings in 2010. This move also reduces complexity and allows us to establish ourselves as an integrated technology group,” added Stefan Draeger, chairman of the executive board of Draeger.

In 2003, Siemens contributed the activities of its electro-medical unit to Draeger's medical engineering business, thereby acquiring a 35% stake in Draeger Medical. In 2007, Siemens reduced its stake to 25%.

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