Germany: Siemens Healthineers to buy Varian for US$16.4bn

Germany’s Siemens Healthineers has said that it will acquire US cancer care specialist Varian for US$16.4bn.

Siemens Healthineers will acquire all shares of Varian for US$177.50 per share in cash. This is a 24.4% premium to the closing price of Varian shares in New York on Friday, according to Bloomberg.

“With this combination of two leading companies we make two leaps in one step: a leap in the fight against cancer and a leap in our overall impact on healthcare,” said Bernd Montag, chief executive of Siemens Healthineers in a statement.

Headquartered in Palo Alto, Varian is a leader in the field of cancer care, especially in radiation oncology and related software.

In fiscal year 2019, it posted revenues of US$3.2bn with an adjusted operating margin of approximately 17%.

Since 2012, Siemens Healthineers and Varian have worked together on a strategic partnership combining Varian’s therapeutic systems and Siemens Healthineers imaging technology. The companies hope that the transaction will see them develop improved cancer therapy solutions – from imaging for treatment planning to focused radiation therapy – for efficient workflow and effective, personalised treatment.

Siemens Healthineers said that Varian is expected to positively contribute to its adjusted basic EPS within the first 12 months after closing of the acquisition. It is aiming for EBIT synergies of at least €300m (US$353.4m) a year in fiscal year 2025.

Siemens Healthineers said that it intends to finance the acquisition with a mix of debt and equity. Siemens Finance, a subsidiary of parent company Siemens, will provide Siemens Healthineers with a bridge facility of €5.2bn.

Siemens Healthineers then intends to replace up to 50% of the amount available under the bridge facility through the issuance of equity.

The acquisition of Varian is expected to close in the first half of 2021, subject to shareholder and regulatory approval.

Siemens Healthineers also released third-quarter figures on Sunday, 2 August, showing a 6.9% decline in revenues to €3.3bn due to the impact of the Covid-19 pandemic.

“For the fourth quarter, we are anticipating a significant improvement of our business performance compared to the third quarter,” said Montag.