The US$16.4 billion purchase of Varian Medical Systems not only gives Siemens Healthineers AG an entry into cancer treatment — one of the hottest areas in medical technology — but also opens a potential path into Germany’s benchmark DAX.
“We’ll create additional free float which eventually will lift us into the DAX,” Healthineers chief executive officer Bernd Montag said in an interview with Bloomberg TV. “We are very certain about this transaction, it’s the right time, and we are super confident about financing.”
The Erlangen, Germany-based maker of magnetic resonance imaging machines and laboratory equipment on Sunday announced it is offering US$177.50 a share for Palo Alto, California-based Varian, 24 percent more than its closing price on Friday.
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With Varian, Healthineers would gain market share in devices and software used for cancer therapy. Recent developments in radiation therapy, coupled with more precise imaging, have been linked to lower cancer death rates, which Montag said the company is keen to capitalize on.
The deal has “clear strategic rationale,” Citigroup analyst Kate Kalashnikova said in a note. “The combined company will have the most comprehensive cancer portfolio in the industry.”
The deal is the biggest healthcare acquisition this year.
The purchase would be financed through both debt and equity, Healthineers said. That includes a 15.2 billion euro (US$17.9 billion) bridge loan from parent Siemens AG, followed by a capital increase this year that Siemens would not participate in.
As a result, the parent company’s stake in Healthineers would decline to about 72 percent from 85 percent, Siemens said.
“Varian will get access to our broad clinical data pool, which will enable us to more quickly develop a wider range of personalized and precise therapies,” Montag said in a call on Sunday.
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