Siemens and Healthineers: Valuing the IPO

15 Pages Posted: 30 Sep 2019

See all articles by Robert S. Harris

Robert S. Harris

University of Virginia - Darden School of Business

Paul Holtz

University of Virginia - Darden School of Business

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

Sept. 13, 2019

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

. . .

Keywords: company valuation, IPO, discounted cash flow, sum-of-the-parts valuation, multiples, peer comparisons, EBITDA

Suggested Citation

Harris, Robert S. and Holtz, Paul, Siemens and Healthineers: Valuing the IPO. Darden Case No. UVA-F-1913. Available at SSRN: https://ssrn.com/abstract=3460761

Robert S. Harris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4823 (Phone)
434-924-4859 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/harris.htm

Paul Holtz

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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