Biggest medical deal of the year; Siemens Healthineers to acquire Varian

By Rahul Vaimal, Associate Editor
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The German health business Siemens Healthineers announced that it will acquire Varian Medical Systems in a deal worth $16.4 billion. Varian Medical Systems is a US firm that makes devices and software related to cancer care.

In the largest medical acquisition of the year yet, Siemens Healthineers will buy all shares of Varian for $177.50 each in cash, under the negotiated deal, offering a 24% premium on Friday’s closing price for the US firm.

Healthineers was spun off by the German industrial giant Siemens in 2018 but maintains a controlling stake in it. Siemens will provide bridge funding worth $17.9 billion for the transaction and as a result, will dilute its stake in Healthineers from 85% to around 72%.

A bridging loan is typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger or longer-term financing and is a type of short-term loan. 

Through the deal, they aim to build a global leader in cancer care solutions by 2025 and will give Healthineers a significant market share in the fast-growing cancer care sector where it currently has little presence. 

Varian shareholders and regulators are yet to approve the offer and the deal is expected to close in the first half of 2021, while Siemens said it expressly supported the deal, in a separate statement.

Bernd Montag

“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”
Bernd Montag, CEO 
Siemens Healthineers.

Healthineers’ fiscal third-quarter results, which were pre-released due to the acquisition announcement, showed profits decreasing 6.9% year-on-year as a result of the pandemic. Its adjusted operating margin was 13.9%, down 1.2 percentage points from the same period a year ago, while the adjusted basic earnings per share dropped 21%.

Revenue is expected to be stable in fiscal 2020 as long as the market climate does not deteriorate further.