Germany's Siemens Healthineers To Acquire Varian Medical In $16.4B All-Cash Deal

Varian Medical Systems, Inc VAR announced Sunday that Siemens Healthineers AG SMMNY would purchase it in an all-cash transaction valued at $16.4 billion.

What Happened

The Palo Alto, California-based laboratory diagnostics company said Siemens Healthineers would purchase all its outstanding shares at $177.50 each. This is a premium of nearly 24% over last Friday’s closing price of $142.72.

The transaction is expected to be completed by the first half of 2021, Varian noted.

In a separate statement, Siemens Healthineers said it expects the Varian acquisition to contribute to its adjusted basic earnings per share within 12 months following the closing of the deal.

The German medical technology giant is aiming for earnings before interest and taxes (EBIT) synergies to the tune of $353 million per year in FY 2025. 

It plans on financing the Varian acquisition with a mix of debt and equity. 

Why It Matters

The two companies have been working in partnership on improving cancer treatments since 2012, according to the German corporation.

Parent Siemens Aktiengesellschaft SMAWF retains an 85% stake in Healthineers even though it spun off the company in 2018, the Financial Times noted.

On Sunday, Varian reported net earnings per diluted share of 78 cents and revenue of $694 million for its third quarter this financial year, a decline of 16% year-over-year.

Price Action 

Siemens Healthineers OTC shares closed 1.35% lower at $25.86 on Friday.

Photo courtesy: Varian Medical Systems Inc.