German health group Siemens Healthineers said on Sunday it would acquire Varian Medical Systems in a deal that values the US maker of devices and software for cancer treatments at $16.4 billion (Dh60.2bn).
Under the agreed transaction, Siemens Healthineers will acquire all shares in Varian for $177.50 each in cash, representing a 24 per cent premium to the US company's closing price on Friday.
Industrial conglomerate Siemens, which spun off Healthineers in 2018 but retains a controlling stake, will provide bridge financing for the deal, which seeks to create a global leader in cancer care solutions by 2025.
"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," said Bernd Montag, chief executive of Siemens Healthineers.
Varian president and chief executive Dow Wilson said: "With Siemens Healthineers, we will transform care for a greater number of patients worldwide, as well as broaden opportunities for our employees as part of a larger and more global organisation."
The deal, first reported by Bloomberg, is subject to approval by Varian shareholders and regulators. It is expected to close in the first half of 2021 and be accretive to Siemens Healthineers' adjusted basic earnings per share within 12 months of that.
Siemens is effectively putting its balance sheet to work to fund the deal, providing a bridging loan of €15.2bn($17.9bn/Dh65.7bn) to Healthineers.
The medical technology unit aims to replace 50 per cent of that through a rights issue this year, subject to market conditions.
Siemens said in a separate statement that it expressly welcomed the deal and would raise the money for the bridging loan by issuing bonds. As a result, its stake in Healthineers would be diluted to about 72 per cent from 85 per cent.
Separately, Healthineers fiscal third quarter results, pre-released instead of Monday due to the acquisition announcement, showed revenue declined 6.9 per cent year-on-year on a comparable basis to €3.3bn, due to the impact of the coronavirus pandemic.
Its adjusted operating margin was 13.9 per cent, down 1.2 percentage points from the same period a year earlier, while adjusted basic earnings per share fell 21 per cent to 30 euro cents.
Revenue is forecast to be flat in fiscal 2020 while adjusted basic earnings per share are seen at between €1.54 and €1.62, compared to €1.70 last year, assuming the business environment does not deteriorate further.
