Essay
Siemens and Healthineers: Valuing the IPO
- Instelling
- Tilburg University (UVT)
This is one of the assignments for the financial management course.
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FINANCIAL MANAGEMENTASSIGNMENT 1
Siemens and Healthineers: Valuing the IPO
Question 1
The CEO of Healthineers and the management board of Siemens AG were very focused
on its development and potential growth, such that IPOs were scheduled for mid-March
2018 to promote the success of the company and to encourage entrepreneurial freedom.
In their review, the IPO would ensure that Healthineers would be able to participate in
the competitive healthcare market and would improve its independence and autonomy
as a separate public company. Since Siemens will remain with a large part of
Healthineers, they are interested in the future development and
strategy of the company.
Being an independent corporation will increase the entrepreneurial
versatility needed to be a leading global provider of healthcare
technology. As Kaeser points out the healthcare sector has
experienced a wave of industrialization and restructuring, thus growing from an
industry dependent on expertise to a knowledge-based one.
Healthineers as an IPO will be operated independently so that they could have more
ability to respond rapidly to business shifts (consumer and industry) to invest in
potential opportunities and concentrate energy on the distinct features of the sector.
John Kaeser hopes that the IPO would position Healthineers to effectively participate in
the competitive healthcare industry. Maintaining the first place in medical imaging and
advanced treatments and even taking the first place in point-of-care diagnostics
The IPO could allow Healthineers to develop and explore new emerging areas in the
healthcare sector. According to Kaeser, as an independent corporation, Healthineers
would set up a separate stock to create more available funds. With these funds a
proposal is to acquire future start-ups developing, new health and diagnostic products
and services. As a consequence, the acquisition of emerging businesses with equity
rather than debt, reducing the financial distress costs, not leveraging the company and
following the pecking order theory.
, Question 2
Digitalized healthcare (offered by Healthineers) has the goal of offering a better,
quicker and more modern means of diagnosing, bringing more precision to physicians
and medical personnel, changing healthcare access and enhancing patient service.
Year after year, the health care environment is moving towards more reliable,
affordable and personalized care. The digitization of health care, the growing emphasis
on the patient and the availability of evidence-based medicine are the foundations for
improved creativity and change. The health care sector is becoming more and more
patient-oriented, offering higher efficiency, reduced costs, more information and more
options.
The digitalization of healthcare is stimulating an increase in the use of cloud and cloud
services. The cloud is proven to be more cost efficient and with a greater security and
accessibility. As a consequence of this rapid growth in demand for cloud services a new
market is formed known as global health care cloud computing market and it is
predicted to grow around $35 billion by 2022.
On the other hand, since more technology is being implemented in the health care
system some drawbacks arise. Such as malfunctioning equipment, higher chance for
cyber-attacks, power outages, lack of attention to detail etc.
Privacy is a major concern in a technological healthcare system. If a hacker would gain
access to the private health records, the information could be published online and even
used to steal identity. According to a director of threat intelligence D. Jackson stolen
health credentials can go for $10 each, around 10-20 times the value of an American
credit card number. Based on the case study, the main competitors of Healthineers are,
GE, Philips, Roche and Abbott.
GE abbreviation for General Electric is an American multinational conglomerate
company founded in 1892 several sectors. GE Healthcare has more than 100 years in
the sector and works towards digitalization of healthcare and health systems. They are
located in more than 160 countries, reported $17 B of revenue in 2019 and invest more
than $1 B in R & D.
Philips is a Dutch multinational company founded in 1892. It is organized in three main
fields, Personal Health, Connected Care, Diagnosis and Treatment. Koninklijke Philips
is a multinational conglomerate. His leader in diagnostic image,patient monitoring and
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