Siemens and Healthineers: Valuing the IPO

Abstract

This case covers the initial public offering (IPO) of the Siemens AG subsidiary Healthineers. The case offers the opportunity to discuss IPOs and to value the company. In contrast to "Healthineers: A Strategic IPO" (UVA-F-1881), which provides some base case valuation analysis, this version of the case is designed to be used when a primary teaching objective is to have students perform more of the analysis. The material is set in 2018, when CEO Joe Kaeser and the management board of Siemens planned an IPO of its Healthineers subsidiary to support the company's continued success and spur entrepreneurial independence. The IPO would position Healthineers to compete successfully in the global health care market, which was quite different from other sectors in which Siemens, a global technology conglomerate, operated. While Siemens would maintain a substantial equity interest, Healthineers would become a separate public company with increased flexibility and autonomy. In the immediate term, the management team was especially interested in what value financial markets would place on Healthineers once it was a public company. Excerpt UVA-F-1913 Rev. Feb. 24, 2020 Siemens and Healthineers: Valuing the IPO By early March 2018, CEO Joe Kaeser and the management board of Siemens AG (Siemens) had been focused on the progress of its Healthineers subsidiary for several years. Management planned an initial public offering (IPO) of Healthineers in mid-March to support the company's continued success and spur entrepreneurial independence. The IPO would position Healthineers to compete successfully in the global health care market, which was quite different from other sectors in which Siemens—a global technology conglomerate—operated (see Exhibit 1). Though Siemens would maintain a substantial equity interest, Healthineers would become a separate public company with increased flexibility and autonomy. Because Siemens would be a long-term shareholder, Kaeser and the board had a keen interest in Healthineers's strategy and performance. Would the company continue to drive profitable growth in the short term? Tap into adjacent growth markets in the medium term? Be a market leader in health care? In the immediate term, the board was especially interested in what value financial markets would place on Healthineers once it was a public company. Siemens Healthineers AG . . .