Cerner has announced a definitive agreement to buy Siemens’ health information business, Siemens Health Services, in a £770m ($1.3 billion) cash deal.

Reuters has reported that Siemens has said it is selling its hospital information system business because it failed to consistently keep up with competitors.

However, in a press release, the two companies say they will now form a strategic alliance to bring new solutions to market that “combine Cerner's health IT leadership and Siemens' strengths in medical devices and imaging.”

Neal Patterson, chairman of Cerner, said in the statement: “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.

“The alliance we're creating will drive the next generation of innovations that embed information from the [electronic medical record] inside advanced diagnostic and therapeutic technologies, benefitting our shared clients.”

The move will increase Cerner revenues to £2.7 billion ($4.5 billion) annually, and give it approximately 18,000 healthcare clients internationally.

Siemens developed two major products in the health information space, the information system that it developed with T-Systems Austria in the 1990s, and the Soarian workflow system. / Soarian is used by several hundred hospitals in Germany, including a hospital in Hamburg that is widely recognised as one of the most digitised on the continent. It also secured business in Turkey, Greece, and South Africa.

Soarian won a UK reference site at Dudley Group NHS Foundation Trust, which made pioneering use of it to improve the flow of patients through the hospital and to tackle infections.

However, in recent years the company has clearly been focused on its medical imaging business in the UK, which is not included in the deal announced today.

Cerner, meanwhile, is well known in the UK for its involvement in the National Programme for IT, which chose Millennium for around half of the trusts in London and a dozen trusts in the South.

It has further installations, won through open tender, that include Newcastle upon Tyne Hospitals NHS Foundation Trust, which is joint top of EHI’s Clinical Digital Maturity Index.

The company has also secured business in the rapidly changing pathology market, an area in which Siemens also has an interest. Siemens' laboratory and diagnostics business is also not included in today's deal.

"We are excited to join with one of the most competitive companies in health IT today, and a recognised leader in innovation," said John Glaser, chief executive of the Health Services business unit of Siemens Healthcare.

Cerner says that it will continue to support Siemens Health Services core platforms. Cerner plans to support and advance the Soarian platform for at least the next decade.

The merged company will employ 20,000 staff in 30 countries and have a combined annual R&D investment of £385m ($650m).