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Siemens' health arm moves for Varian Medical

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Cutting edge: A workshop of computed tomography scanners of medical device firm Siemens Healthineers in Shanghai, China.

Cutting edge: A workshop of computed tomography scanners of medical device firm Siemens Healthineers in Shanghai, China.

REUTERS

Cutting edge: A workshop of computed tomography scanners of medical device firm Siemens Healthineers in Shanghai, China.

Siemens Healthineers has agreed to buy Varian Medical Systems for about $16.4bn (€13.9bn) in cash in the biggest medical acquisition of the year.

The German medical technology company offered $177.5 a share for the Palo Alto, California-based business, 24pc more than its closing price on Friday.

The bid will be financed through both debt and equity, Siemens Healthineers said in a statement on Sunday.

The deal would give Healthineers a sizable market share in the rapidly growing field of cancer treatment where it has little presence currently.

Siemens Healthineers said the purchase will have a positive effect on earnings per share within the first 12 months of the closing.

The acquisition comes amid early signs of a pick-up in deals after the spread of the coronavirus and a worsening economic outlook damped sentiment this year. Deal activity in the medical devices industry is also on the rise, with Thermo Fisher Scientific's proposed acquisition of Qiagen NV for more than $10 billion and Smiths Group Plc mulling the sale of its medical equipment unit.

The purchase will bring together two partners that have collaborated for more than a decade in areas such as radiotherapy diagnostics for cancer treatments.

Healthineers will finance the acquisition through a €15.2bn bridge loan from Siemens AG, followed by a capital increase this year that the parent company will not participate in.

As a result, Siemens' stake in Healthineers will decline to about 72pc from 85pc, Siemens said in a statement. The planned dilution of Siemens' holding could pave the way for Healthineers to enter into Germany's benchmark DAX Index.

Bloomberg