By: Scott Davis
Siemens announced over the weekend that it’s readying its Healthineers biz for IPO in a few weeks that could value the asset at €26-31B ($32-38B USD). The company plans to float a 15% minority stake in the biz at €26-31 per share, which would be worth €3.9-4.65B ($4.8-5.7B), implying a valuation of ~11.5-13.5x F2017 EBITDA (adjusted for capitalized R&D under IFRS accounting) or 1.9-2.2x sales.
A similar valuation for GE Healthcare points to a $48-57B EV, though a sub-$50B valuation seems unreasonable given business mix differences. A quarter of GE’s business is Life Sciences, which is high-margin, high cash generation, and fast-growing with secular biopharma tailwinds. We can envision a scenario in which GE monetizes this business.