Siemens Buys Rolls-Royce Power Assets, Plans Revamp

BERLIN (The Deal) -- Germany's Siemens (SI) has agreed to buy 985 million pounds ($1.7 billion) worth of power-generation assets from London-based Rolls-Royce Holdings plc and plans to spin out its hearing-aid division as recently arrived CEO Joe Kaeser implements his vision for the massive Munich engineering company.

Siemens said it would pay 785 million pounds in cash for Rolls-Royce's gas turbine and compressor activities. The German company would then also spend 200 million pounds to gain access to some of Rolls-Royce's turbine technology development for 25 years.

The deal and the hearing-aid spinoff were among a raft of measures announced on Tuesday and Wednesday aimed at overhauling the corporate structure of former CEO Peter Loescher, whom Kaeser replaced in August and who repeatedly failed to meet profit targets. Siemens has been besieged by lackluster earnings and legal scandals, which led to the promotion of Kaeser, 56, a 34-year Siemens veteran, to the helm.

Other restructuring measures include the carve-out of Siemens' healthcare activities into a standalone unit, a metals joint venture with Mitsubishi Heavy Industries Ltd. and the sale of its airport logistics unit.

The medical unit brought in 13.6 billion euros ($18.9 billion) in revenue last year and analysts suggest the carve-out may be a precursor to a listing or outright sale to allow Siemens to focus on power generation.

"This means that regional organization structures can be tailored to the requirements of the healthcare market and do not have to conform to the company's organizational matrix," the company said.

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