Dade Behring will join Siemens early next year, if the German conglomerate’s $7 billion (€5 billion) bid goes through.
Dade Behring will join Siemens early next year, if the German conglomerate's $7 billion (€5 billion) bid goes through.
The proposed acquisition, announced July 25, is part of a global strategy to position Siemens Medical Solutions as the world's number one provider of diagnostics.
"We want to be a leader in innovation and in cost control," said Erich R. Reinhardt, president of Siemens Medical Solutions, in response to a question posed by DI SCAN during a teleconference call. "With this acquisition, we will continue reaching this aim."
Siemens AG CEO Peter Loscher framed the proposed merger, which is expected to close in early 2008, as "an excellent opportunity for us to overtake Roche."
"Dade Behring has an excellent management team, the same as Prof. Reinhardt has, and it will carry on as a leading company staffed with the best people," he said. "Prof. Reinhardt will develop the business further."
The deal, Siemens' third in about a year, is contingent on regulatory approvals and other customary closing conditions, according to the company. Last year Siemens spent more than $7 billion to acquire two similar businesses, Diagnostic Products and Bayer HealthCare Diagnostics, both focused on in vitro diagnostics.
Siemens pushed up by a day the release of third fiscal quarter results to accommodate the latest announcement, which was accompanied by word that Siemens plans to sell its VDO automotive unit to the German firm Continental for about $16 billion (€11.4 billion).
Siemens third-quarter net income jumped 54% to €2.1 billion, with revenue up 8% to €20.2 billion. Nearly all of the profit, however, was due to a one-time gain achieved through the sale of the company's telecommunications unit.
Investors put a negative spin on the conglomeration of news, both fiscal and strategic. By mid-day, Siemens' stock price had fallen more than 5% to $136 per share.
Sale of the automotive unit, and the two proposed moves just unveiled, are designed to tighten the company's focus on businesses with growth potential, according to Loscher.
"We want a portfolio in which we can take a number one or two position in global markets that are attractive," he said, defining such markets as having growth potential based on megatrends in demographic change. Healthcare, he said, is one of these.
Dade Behring's 6400 employees garnered $1.7 billion in revenue last fiscal year selling clinical laboratory equipment and integrated solutions for routine chemistry testing; immunodiagnostics, including infectious disease testing; and hemostasis testing and microbiology.
This proposed acquisition reflects a global strategy that led Siemens to spend nearly $2 billion to acquire Diagnostic Products and $5.3 billion to purchase Bayer HealthCare Diagnostics.
The company's plan to spend another $7 billion to acquire Dade Behring speaks to the commitment Siemens has to becoming an integrated diagnostics provider. Dade-Behring will be a perfect match for the other two acquisitions, Loscher said.
"While Siemens with the Bayer and Diagnostic Products additions concentrates mainly on large laboratory equipment, this acquisition will benefit small- and medium-sized laboratories that are Siemens customers," he said.