Sirona Harvard Case Solution & Analysis

Sirona Case Solution

CASE DESCRIPTION

Introduction

Siemens has announced to sell out its non-core dental business units also known as Sirona collectively.Siemens is among world’s largest electrical engineering and electronic companies;it has been operating since 150 years and has about DM 100 billion in revenues. It is also the market leader in its major products. Currently, the company is facing increasing competition because of the globalization and technological advancement becoming cheaper which has resulted in new companies to compete well. Siemens has formulated its strategy to cater such developing issue to divest its non-core businesses and focusing all its efforts towards the core business of the company and thus strengthen its competitive position. Mostly the company has planned to sell of its dental products businesses and has made it public.

Sirona

Sirona comprising of major business unit of dental products is a market leader with its leading dental products. It has its own dealer network and has achieved a major market share in all of major market segments. Sirona consists of different legal entities including three major separate business units which are; U.S subsidiary, Main manufacturing center in Blenheim and owned dealership network. Blenheim was founded in 1962 which produces and supplies Sirona’s entire product range.The U.S subsidiary Pelton& Crane (P&C) along with Blenheim both are operated within Siemens but only make contribution in dental sector only that is out of the main business of Siemens.

Subject Matter

More than 50 potential buyers are invited for the bid from both industrial and financial sectors. In the second stage of the auction to sell Sirona only nine bidders are left including SV. SV is the strongest bidder and is more interested to acquire Sirona but is facing immense competition from other four strong bidders in the auction process. Apart from this, there are several other matters and problems that need to be dealt with. Moreover, the managements of SV are confident that they will gain competitive advantage and prosper its business if they secure this deal.

Main Issues

Schroder Venture is interested in purchasing the dentist businesses of Siemens group, who has offered it for sale, the businesses are combined and known as Sirona. After performing research regarding the organization, SV has found  several issues that may hinder the company to achieve profits from its purchase of a DZ 800 million company.The major issue is the uncertainty faced by SV regarding the growth of the company. The business plan offered by Siemens regarding the future expected performance of Sirona shows that the company has good growth potential as well as cost cutting opportunities are also available. However,during a deep analysis it is found that one of the subsidiary company is not performing well and the plan offered by Siemens shows that Sirona will be able to increase its market share in markets where it is already a leader. Furthermore,another problem that will be faced is that Sirona has worked under the brand name of Siemens and has not developed itself into a brand yet which might hinder its future growth.

Benefitsfrom Sale of Sirona

It can be seen that Sirona had been offered for sale, therefore the parties involved in the case should be able to benefit from this transaction otherwise the sale may not take place. The main parties involved in this case other than Sirona are as following;

Siemens AG

Siemens is the parent company of Sirona and is planning to sellall of its non-businesses that were not producing synergies for the group. Siemens intended to increase its shareholders’ value by effectively operating its core businesses and only continuing those businesses that were providing benefits to its core operations. Therefore, if Siemens was able to sell Sirona, then it would be able to concentrate on its core businesses. Furthermore,the cash flow position of the company will be improved as the company will receive the sale proceeds of Sirona, which it can invest in further expanding its core businesses.......................

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