- The Healthineers arm of Siemens AG (OTCMKTS: SIEGY) is buying Varian Medical Systems, Inc. (NYSE: VAR) for about $16.4 billion in cash
The Healthineers arm of Siemens AG (OTCMKTS: SIEGY) is buying Varian Medical Systems, Inc. (NYSE: VAR) for about $16.4 billion in cash in what is considered the largest medical acquisition of the year. Siemens offered Varian Medical Systems $177.5 per share, which is 24% higher than the closing price of the stock on Friday. The bid is going to be financed through debt and equity.
This deal is going to give Healthineers a much larger market share in the cancer treatment market. And Siemens Healthineers noted that the acquisition will have a positive effect on earnings per share within the first year of closing.
The acquisition is going to combine two partners that worked together for over a decade in a variety of areas like radiotherapy diagnostics for cancer treatments.
Healthineers is going to finance the acquisition with a €15.2 billion ($17.9 billion) bridge loan from Siemens AG along with a capital increase this year that the parent company is not going to participate in. And Siemen’s stake in Healthineers will decline to about 72% from 85%. By diluting from Siemens, Healthineers will be soon entering into Germany’s benchmark DAX Index. Specifically, Healthineers will consider inclusion next year.
Healthineers spun off from Siemens in 2018 and it grew 2.7% this year thus boosting its market capitalization to €43.6 billion. And revenue in the third quarter was €3.31 billion. Earnings before interest and taxes hit €461 million. The company is expecting full-year earnings per share of between €1.54 and €1.62 euro compared to €1.57 last year.
KEY QUOTES:
“Today’s announcement represents an important milestone in our company’s history, and our Board is confident that this is the right path forward for Varian. In addition to delivering immediate and compelling value to our shareholders, the combination with Siemens Healthineers brings us even closer to realizing our transformative vision of a world without fear of cancer. Siemens Healthineers’ innovative leadership in detection and diagnosis will extend our ability to serve clinicians and patients from the very first stage in the fight against cancer. And, we will be positioned to transform care for a greater number of patients worldwide.”
“Varian’s innovative and patient-centric culture has enabled us to become an iconic leader in radiotherapy and multi-disciplinary cancer care, with a trusted global brand and strong customer loyalty. Siemens Healthineers values our talented and engaged employees and recognizes the strength of the Varian brand, our cutting-edge portfolio, and the relationships we’ve nurtured. We are thrilled to partner with them to extend our renowned customer care to reach more patients around the world. With Siemens Healthineers, we can accelerate our vision, meaningfully increase our patient care impact and broaden opportunities for our employees as part of a larger and more diversified organization.”
— Dow Wilson, President and Chief Executive Officer of Varian
“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. This decisive moment in the history of our companies means more hope and less uncertainty for patients, an even stronger partner for our customers, and for society more effective and efficient medical care. Together with Varian’s outstanding and passionate employees, we will shape the future of healthcare more than ever before.”
— Dr. Bernd Montag, CEO of Siemens Healthineers AG
“As the first of the three companies in our new Siemens Ecosystem, we gave Siemens Healthineers an independent, focused setup. This approach is the core of our Vision 2020+ strategy, which we’re rigorously executing – even in the time of COVID-19. Therefore, we expressly welcome and support this acquisition since it will be a powerful driver for Siemens Healthineers. A transformational step of this kind wouldn’t have been possible in the conglomerate structure of the old Siemens AG.”
— Joe Kaeser, President and CEO of Siemens AG
“The acquisition of Varian will create a world-leading company in the area of cancer therapy – a company in which Siemens AG will participate as a strong and long-term majority shareholder. Siemens Healthineers is excellently positioned in an attractive growth market in the global battle against cancer. The acquisition will benefit everyone – above all patients, but also the shareholders of both companies.”
— Roland Busch, Deputy CEO of Siemens AG
