Siemens New CEO Starts with Disposal, Poor Third-Quarter
Published 8:52 AM ET Wed, 25 July 2007 Updated 3:12 PM ET Thu, 5 Aug 2010 Reuters
Siemens' new chief executive made his debut on Wednesday with a politically astute disposal, a surprise acquisition but a weak set of third-quarter results, sending Siemens shares down more than 4%.
The German industrial conglomerate said it would sell its automotive unit, VDO, which it had originally planned to list on the stock market, to car-parts supplier Continental for 11.4 billion euros ($15.7 billion).
The price was less than the 12 or even 13 billion euros that some media had reported Continental and rival suitor TRW were prepared to pay.
"Ultimately, Siemens needs to get faster, less complex and more focused. Today's announcements regarding Siemens VDO Automotive and Medical Solutions are important steps in that direction," CEO Peter Loescher said in a statement.
Siemens says Continental paid best price for VDO
Germany's Continental offered the best price in a contest to buy Siemens automotive unit VDO, Siemens Chief Executive Peter Loescher told a conference call on Wednesday.
"Yes, absolutely," Loescher answered when asked whether Continental had offered more than rival suitors.
U.S. car-parts maker TRW, which is majority owned by Blackstone, had also been interested in buying the business.
Siemens Earnings
The news temporarily eclipsed Siemens' third-quarter results, which were released a day early and were weaker than expected on all fronts.
Siemens shares traded down 4.6% at 101.20 euros, by far the biggest decliners in a 0.6% weaker German blue-chip DAX index.
Third-quarter orders rose 13% to 22.15 billion euros, less than the 22.44 billion-euro average forecast in a Reuters poll after rivals General Electric and Alstom reported booming demand for infrastructure products and services.
Operating profit also disappointed, rising 22% to 1.5 billion euros, below the 1.94 billion poll average.
Siemens said the result was hurt by negative equity investment income of 371 million euros related to Nokia Siemens Networks, its telecoms equipment joint venture with mobile phone maker Nokia .
Sales rose 8% to 20.18 billion euros and net profit rose to 2.07 billion euros in the quarter, helped by a gain from the transfer of assets into NSN.
Siemens to Buy Dade Behring
Siemens also said it would buy U.S. medical-diagnostics company Dade Behring for around $7 billion, or $77 per share.
Siemens plans to launch a tender offer for Dade Behring stock by Aug. 8. Dade Behring makes chemistry products, cardiovascular tests and tests that measure blood-clotting ability.
The board of directors of Dade Behring, which also reported higher second-quarter earnings, unanimously recommended that shareholders tender their stock.
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