Cerner to buy Siemens Health Services for $1.3 billion

Cerner Corp is buying the health information technology business unit of German industrial conglomerate Siemens AG for $1.3 billion in cash.

The two companies announced the deal yesterday. Cerner's stock rose about 3% in after-market trading.

Cerner, a Kansas City-based health information technology company, said it expects the acquisition of Siemens Health Services to contribute 15 cents per share to its adjusted earnings next year and more than 25 cents per share in 2016. It intends to finance the acquisition with available cash.

Both companies' boards have approved the deal, which is expected to close in the first three months of 2015.

As part of the pact, Cerner and Siemens agreed to team up to develop medical technology projects.

The alliance has an initial term of three years and calls for each company to invest up to $50 million. An early focus of the companies' joint efforts will center on medical imaging and its role in diagnostic and therapeutic decision-making.

Neal Patterson, Cerner's chairman and CEO, called the deal an "all-win situation" for both companies' clients and Cerner's shareholders and employees.

"Siemens' health care IT assets provide additional scale, R&D, an impressive client base and knowledgeable and experienced associates who will help Cerner achieve our plans for the next decade," Patterson said.

Going by 2014 estimates, Cerner and Siemens Health Services have a combined annual research and development investment of $650 million, and $4.5 billion in annual revenue.

The deal was announced after the close of the regular trading session on Wall Street Cerner's stock gained $1.66 to $56 in extended trading.