US based Cerner has signed an agreement to acquire Siemens' health information technology business unit, Siemens Health Services for $1.3bn.
As part of the deal, both the companies will enter into a three-year strategic alliance to strengthen Cerner’s health IT technology and Siemens’s medical devices and imaging technology.
Under the strategic alliance, each company contribute about $50m to fund projects that are important to both the companies.
The acquisition will combine investments in R&D, knowledgeable resources and complementary client bases.
Siemens Healthcare CEO Hermann Requardt said: "In the recent years, we have continuously invested in our HS-portfolio and achieved significant progress on the technology side."
"At the same time, we realized that business success of our hospital information systems could not always keep pace with our competition."
"Additionally an increasing number of country-specific requirements, such as resulting from US healthcare reform, make it increasingly challenging to achieve sufficient scale effects.
"Going forward we will focus on the development of information systems that support our businesses in laboratory diagnostics as well as imaging and therapy."
Cerner chairman, CEO and co-founder Neal Patterson said: "We believe this is an all-win situation for the clients of both organisations and all of our associates and shareholders."
"Through more than $4 billion of cumulative investments in R&D, Cerner has established a strong market standing and is positioned for continued growth.
"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.
"In addition, the alliance we’re creating will drive the next generation of innovations that embed information from the EMR inside advanced diagnostic and therapeutic technologies, benefiting our shared clients."
Combined with Siemens Health Services, Cerner expects annual revenue of $4.5bn and will have an annual research and development expenditure of about $650m.
After completion of the acquisition, support for Siemens Health Services core platforms will remain in place and current implementations will continue, while Cerner plans to support and advance the Soarian platform for at least the next decade.