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Siemens buys SMS for $2.1B
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May 1, 2000: 8:18 a.m. ET
Stock in Shared Medical Systems surges after deal with German firm
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NEW YORK (CNNfn) - Siemens, the German electronics and engineering firm, agreed Monday to acquire healthcare software maker Shared Medical Systems for about $2.1 billion cash to increase its presence in the U.S. market. Shared Medical stock surged 73 percent on the news.
The German company will pay $73 for each Shared Medical share, a 75 percent premium over the software company's close of 41-7/16 Friday. In early Monday trading on the New York Stock Exchange, Shared Medical stock catapulted 29-15/16 to 71-3/8.
Malvern, Pa.-based SMS (SMS: Research, Estimates) has annual sales of $1.2 billion and 7,600 employees. It was the subject of an unsuccessful hostile takeover bid in March by smaller U.S. rival Eclipsys. SMS evaded the hostile $67 a share Eclipsys bid after the suitor itself was taken over by Neoforma Inc. (NEOF: Research, Estimates), which sells medical supplies over the Internet.
SMS operates in 20 countries, providing information systems for hospitals and other health-care providers.
"The acquisition is an ideal move for bolstering our position in the U.S. market and further confirms Siemens' transformation into an IT-driven, high-tech company," Siemens CEO Heinrich v. Pierer said.
Siemens has been restructuring to move away from its engineering roots to focus on technology products and already has an established healthcare technology operation.
"This acquisition is part of our strategy to substantially strengthen the range of services and IT solutions in the Siemens portfolio. Services currently account for 25 percent of our sales and our goal is to increase this to 50 percent," Pierer said.
Siemens estimates that the IT market in the healthcare sector will grow 10 percent annually. The company did not say what the industry currently is worth.
The tender offer, which requires antitrust clearance, is expected to be launched within the next 10 days.
Siemens shares were not traded Monday because the Frankfurt exchange was shut for a public holiday. 
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