MUNICH/BERLIN:

German health group Siemens Healthineers said on Sunday it was buying Varian Medical Systems Inc of the United States for $16.4 billion in a deal that seeks to create the global leader in cancer care solutions.The deal is the first major growth move by Healthineers since it was spun off and floated in 2018 by Siemens, which is undertaking a broader shakeup of its conglomerate structure to create room for its business units to do their own deals.

Siemens, which will retain control over Healthineers, will provide bridge financing for the deal that will be partly refinanced by a rights issue by the medical technology unit later this year.

Under the agreed transaction, Healthineers will acquire all shares in Varian for $177.50 each in cash, representing a 24% premium to the U.S. company’s closing price on Friday and 42% above its 30-day weighted average.

“With this takeover, we are significantly strengthening our position – in addition to cardiology and neurology – in the field of oncology,” Chief Financial Officer Jochen Schmitz told Reuters in an interview.

CEO Bernd Montag rejected suggestions that Healthineers had overpaid for Varian. “This is an icon in our industry,” he told reporters on a conference call. “If you put it into perspective we achieved a sensible price.”

Through the deal to buy Varian, Healthineers acquires the leader in radiation therapy with a market share of over 50%.

Healthineers highlighted a long-term rise in the incidence of cancer – from 14 million cases worldwide in 2010 to a forecast 25 million in 2030.

That translates into an addressable market of $20 billion that is forecast to grow at an annual rate of between 6% and 10%, the company said in a presentation on the deal.

The transaction, 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.

“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 organization,” Varian President and Chief Executive Officer Dow Wilson said.