Siemens to Buy Health Care IT Vendor

FRAMINGHAM (05/01/2000) - Siemens AG today announced that it will acquire health care software and services vendor Shared Medical Systems Corp. (SMS) in Malvern, Pennsylvania, for $2.1 billion in cash.

The two companies said Siemens is scheduled to make an official tender offer to SMS shareholders in the next 10 days. The acquisition is expected to be completed by the end of next month, pending regulatory approval, they added.

SMS makes application software and provides application hosting, e-commerce and systems management services to users in the health care industry. In a statement, Siemens said the acquisition would double its own services business as a percentage of total sales, to 50%. The move would also strengthen Siemens' market share in the U.S., the German company said.

SMS has 7,600 employees and reported revenue of $1.2 billion last year. But the company also said today that its first-quarter revenue and profits dropped sharply compared with the same period last year. First-quarter profits fell from $18.3 million a year ago to $2.7 million, while revenue dropped from $287.1 million to $240.6 million.

Marvin Cadwell, president and CEO of SMS, said the first-quarter results were hurt "by an industrywide weakness in new software sales and a slower-than-anticipated return in the demand for large-system implementations following Y2k."

Once the deal goes through, it will become part of the Siemens Medical Engineering Group, a Siemens subsidiary that employs 19,000 people and had sales of 4.09 billion euros ($4.3 billion) last year. The subsidiary already has a U.S. affiliate, Siemens Medical Systems Inc., based in Iselin, New Jersey

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