Today, Siemens Healthineers announced that it agreed to acquire Varian Medical Systems in cash. The transaction valued the medical device manufacturer at approximately $16.4 billion, which is higher than its current market value More than 20%.
Siemens Healthineers said in a statement on Sunday that the German company offered $177.5 per share to acquire a business headquartered in Palo Alto, California, which will be financed through debt and equity. It is 24% higher than Friday's closing price.
Varian Medical Systems' stock price has not changed much this year, with a market value of approximately $13 billion. The stock’s recent price-to-earnings ratio is 38 times the expected price-to-earnings ratio, while the S&P 500 Health Index has a price-earnings ratio of 18 times.
Siemens Healthineers Group stated that the acquisition will have a positive impact on earnings per share within the first 12 months of completion of the transaction.
On the occasion of this acquisition, after the Coronavirus (COVID-19) virus spread and the deterioration of economic recovery prospects suppressed market sentiment this year, there are signs that investment mergers and acquisitions have rebounded. The transaction will bring together two partners who have been cooperating for more than ten years in the fields of cancer radiotherapy and diagnosis. Varian Medical Systems’ linear accelerators may be very suitable for Healthineers’ MRI machines and CT scanners. This is an important division of the company, but its growth has slowed in recent quarters.
Siemens Healthineers has grown very well in the diagnostic field, and two months ago, its Coronavirus (COVID-19) virus antibody test received an emergency use authorization from the US Food and Drug Administration, which allows users to identify recent or previous infection.
This world is very interesting. The global Coronavirus (COVID-19) epidemic has not yet been fully controlled, and such a blockbuster M&A transaction has been born in the medical field. One is an aircraft carrier in the diagnostic industry and the other is a leading company in the cancer treatment industry.