Siemens sells hospital IT business to Cerner for $1.3 billion

FRANKFURT (Reuters) - German engineering group Siemens plans to sell its hospital IT business to Cerner Corp, a U.S. provider of healthcare IT services, for $1.3 billion in cash, the two companies said late on Tuesday.

The deal comes as Siemens Chief Executive Joe Kaeser seeks to focus the group, Germany's second-biggest company by market value, on its most promising businesses to close a gap with more profitable competitors such as Switzerland's ABB and U.S.-based General Electric.

Siemens said it was selling its hospital information system business because it failed to consistently keep up with competitors.

"Additionally an increasing number of country-specific requirements, such as (those) resulting from U.S. healthcare reform, make it increasingly challenging to achieve sufficient scale effects," Hermann Requardt, CEO of Siemens's Healthcare division, said in a statement.

Instead, the group will focus its efforts in the healthcare IT area on the development of systems that support its businesses in laboratory diagnostics as well as imaging and therapy.

The deal with Cerner is expected to close in the first quarter of 2015.

Cerner, which said it would finance the deal with cash on hand, said the transaction would add 15 cents to its adjusted per-share earnings in 2015.

(Reporting by Maria Sheahan; Additional reporting by Rohit T. K. in Bangalore; Editing by Sriraj Kalluvila and Victoria Bryan)