East German optics and technology group Carl Zeiss Group is to merge its ophthalmology business with Neuer Markt-listed medical-technology firm Asclepion Meditec.
Carl Zeiss, founder of the German optics and technology group
"Both companies have signed an agreement in principle," Zeiss chief Dieter Kurz announced on Thursday.
Shares in the small Jena-based Asclepion Meditec soared nearly 45% on the news to close at 13 euros.
Zeiss will be the majority shareholder in the new Carl Zeiss Meditec AG, which is to be listed on the Neuer Markt. Around 20% of the shares are to remain in free-float.
The deal still requires approval from Asclepion's shareholders and the Federal Cartel Office.
The venture will boost Zeiss' range of technology in the area of laser treatment for eye diseases, in which the group is seen to be global market leader. Furthermore, the move will secure Zeiss access to the capital markets.
Kurz forecast continued two-digit growth in ophthalmology over the next few years. In the business year ended Sept. 30, the division generated sales of 240 million euros and a two-digit return on sales. It employs some 510 people in Jena, east Germany, and in the United States.
Having overcome a serious crisis in the 1990s, Zeiss posted the best results in its history for last year. Operating profit rose by more than 40% to 172 million euros, while adjusted sales were up 11% at 2 billion euros. The semiconductor division lifted sales 13% to 464 million euros despite the overall downturn in the industry.
For the current year, Kurz forecast sales to rise by a low one-digit percentage and profit to stay flat.
Meanwhile, Asclepion, with annual sales of 42 million euros and a 240-strong workforce, has little positive news to report. The company missed its sales and profit targets and analysts expect it to close the current year with a loss as a result of its ongoing restructuring.