Siemens shares jump as company weighs spin-off of Healthineers stake

Investing.com -- Shares of Siemens AG rose more than 2% on Thursday after reports that the German conglomerate is studying a potential spin-off of a large part of its stake in Siemens Healthineers. 

Siemens currently holds about 71% of Healthineers, down from 85% at the time of the medical technology company’s 2018 listing.

Bloomberg reported Siemens is weighing structures that would distribute part of Healthineers shares to its own shareholders while working to limit tax consequences. 

Analysts at Barclays said a tax-free spin would likely require creating a separate holding company that includes part of Siemens’ operations, a process that “could potentially take up to 12 months”.

The potential restructuring is expected to be a focus at Siemens’ Capital Markets Day on Nov. 13, which will precede Healthineers’ own event on Nov. 17. 

“We will come up with a strategy, how we want to go forward in the Capital Markets Day, December 9,” Siemens CEO Roland Busch said earlier this year, adding, “we are prudently and thoroughly assessing the situation.”

Barclays outlined four scenarios for Siemens’ stake: a continued sell-down above 50% to maintain control, a reduction below 50% that would end control, a partial spin-off similar to Siemens Energy in 2020, or a full spin-off that would remove Siemens completely. 

A reduction below control would trigger refinancing of Healthineers’ loans. Healthineers CEO Jochen Schmitz said in February, “in case there is Siemens would reduce its stake so that they would lose control. There is, so say, a grace period over which we have to refinance this over time.”

Healthineers has about €13.9 billion in loans, most of them with Siemens. Barclays estimated early refinancing could raise expenses by €74 million in fiscal 2026, €125 million in 2027 and €84 million in 2028 compared with existing low-rate debt. 

Longer-term refinancing of loans maturing in 2031 and 2041 could add €68 million annually, equal to about 2% of earnings per share.

Siemens has already reduced its stake in Healthineers through market transactions and capital raises. In February, the company sold 26.5 million Healthineers shares, raising about €1.45 billion and cutting its holding by roughly 2%. 

Its stake also fell from 79% to just above 75% between 2020 and 2021 when Healthineers raised equity to help finance the €13.9 billion Varian acquisition.

Healthineers CEO Bernhard Montag said in May that Siemens’ holding “is not changing how we do things.” 

He added, “there will be a Capital Markets Day also on the Siemens side end of the year, where they have announced that they will also make statements on the portfolio, also on the future of their investment into Siemens Healthineers.”

Barclays compared the situation with past German corporate restructurings, including E.ON’s 2016 spin-off of Uniper and Fresenius’ sell-down of Fresenius Medical Care, both of which initially raised concerns but later supported share performance.

The review comes as Siemens seeks flexibility for acquisitions, particularly in software, after spending $15 billion this year on deals that added less than $1 billion in annual revenue.