BERLIN (Reuters) – German health group Siemens Healthineers (SHLG.DE) said Sunday that it will acquire Varian Medical Systems Inc (VAR.N) in an agreement that values the US manufacturer of cancer treatment devices and software for $ 16.4 billion.
PHOTO FILE: a staff works on an MRI machine at a Siemens Healthineers production line in Shenzhen, China, 25 May 2018. REUTERS / Bobby Yip
Under the agreed transaction, Siemens Healthineers will acquire all of Varian’s shares for $ 177.50 each in cash, representing a 24% premium at the closing price of the US company on Friday.
Siemens industrial conglomerate (SIEGn.DE), which pushed Healthineers in 2018 but maintains a controlling stake, will provide bridging funding for the deal, which seeks to create a global leader in cancer care solutions by 2025.
“With this combination of two leading companies, we are taking two steps in one step: a leap in the fight against cancer and a leap in our overall impact on healthcare,” said Bernd Montag, CEO of Siemens Healthineers.
Varian President and CEO Dow Wilson said, “With Siemens Healthineers, we will transform care for more patients around the world, as well as expanding opportunities for our employees as part of a larger organization and global”.
The agreement, first reported by Bloomberg, is subject to approval by Varian shareholders and regulators. It is expected to close in the first half of 2021 and increase Siemens Healthineers’ adjusted earnings per share within 12 months.
Siemens is actually finalizing its budget to finance the deal, providing a bridging loan of € 15.2 billion ($ 17.9 billion) to healthcare professionals.
The medical technology unit aims to replace 50% of this with a rights issue this year under market conditions.
Siemens said in a separate statement that it specifically accepted the agreement and would raise the bridging loan money by issuing bonds. As a result, its stake in Healthineers would be diluted to around 72% by 85%.
Separately, Healthineers’ third quarter tax results, pre-published instead of Monday due to the acquisition announcement, showed that revenue decreased 6.9% year-on-year on a comparable basis to 3.3 billion euro, due to the impact of the coronavirus pandemic.
Its adjusted operating margin was 13.9%, down 1.2 percentage points compared to the same period of the previous year, while the adjusted basic earnings per share fell by 21% to 30 euro cents.
Revenue is expected to be stable in 2020, while adjusted basic earnings per share is between 1.54 and 1.62 euros, compared to 1.70 euros last year, assuming that the economic environment will not deteriorate further. ($ 1 = 0.8493 euros)
Additional reports by Joern Poltz; Editing by Gareth Jones and Susan Fenton