A grand entrance

25 July 2007 By Una Galani Follow @ugalani

The German group will sell its automotive unit to a German firm for E11bn, or 17 times operating profit. The deal should quell union ire. Nearly half the money is going to buy a US medical technology company, at 31 times operating profit. It s a costly investment in growth.

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Germany's Siemens on Wednesday announced the sale of its VDO automotive unit for E11.4bn to carparts supplier Continental. The price was less than the E12bn that media reports suggested rival suitor Blackstone's TRW was prepared to pay. The new company will form the world's 5th largest automotive parts supplier.

The company also announced the acquisition of US Clinical Diagnostics company Dade Behring for $7bncash as it continues to boost its medical care division. The offer at $77 a share represents a 38% premium to yesterday's closing price.

Separately, Siemens reported slightly lower than expected third quarter result. Sales were up 8% to E20.2bn and operating profit up 22% to E1.5bn. Shares in Siemens traded down almost 6% following the announcements.

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