Siemens Healthineers to buy Varian for $25 billion in 2020's biggest healthcare deal

Siemens Healthineers AG (FRA: SHL)'s $25 billion acquisition of Varian Medical Systems, Inc. (NYSE: VAR) marks the biggest deal yet in 2020.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

Following a slump in new deals during the early months of the COVID-19 pandemic, mergers and acquisitions are showing renewed signs of life.

In the biggest healthcare acquisition to date in 2020, Siemens Healthineers AG (FRA: SHL) will buy Varian Medical Systems, Inc. (NYSE: VAR) for 15.2 billion euros (AU$25 billion).

As first reported by Bloomberg, the acquisition will be financed via a bridge loan from parent company Siemens AG. (Now that's a nice parental loan!) Healthineers offered $177.5 per share. That was 24% above Varian's closing price on Friday of US$142.72.

Siemens will not participate in a capital raising that Healthineers has planned for later this year. But the company reported its ownership of the Healthineers branch is expected to drop from 85% to 72%.

The acquisition is expected to benefit both companies. As Bloomberg notes, they "have collaborated for more than a decade in areas such as radiotherapy diagnostics for cancer treatments."

A snapshot of Siemens Healthineers and Varian Medical Systems

Based in Erlangen, Germany, Siemens Healthineers is a medical technology company with a market cap of $43.3 billion. In March 2020, it reported quarterly revenues of $3.7 billion, up 5.1% year-on-year. Net profits were up 4.0%.

At time of writing, in early morning trade on the German stock exchange, the share price is up 3.1% on the news. After following most shares lower in late February and into March, the share is up 6.0% year-to-date.

As for the new acquisition…

Varian Medical Systems designs and makes radiation oncology treatments and software. The company is based in Palo Alto, California in the United States. Year-to-date, prior to the acquisition, the Varian share price was down 1.4%.

With Varian under its wing, Siemens Healthineers is an international share you may want to look into more closely for your long-term portfolio. And it's another good reminder of why Australian investors should look beyond the ASX for quality shares to help diversify their portfolios.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A young man wearing a black and white striped t-shirt looks surprised.
Broker Notes

These ASX 200 shares could rise 25% to 80%

Analysts think big returns could be on offer from these shares.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors were nervous this Friday, ending the week on a sour note.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Market News

Where to invest $5,000 into ASX 200 shares this month

The team at Bell Potter is bullish on these names. But why?

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
52-Week Highs

8 ASX 200 shares hitting multi-year highs today

These shares have defied the trend, hitting new price milestones amid a day in the red for the ASX 200.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Gainers

Why EOS, Evolution Mining, Renascor, and Woodside shares are jumping today

These shares are ending the week on a high. But why?

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

Why Accent, Cettire, Ioneer, and Pro Medicus shares are dropping today

These shares are ending the week in the red. What's going on?

Read more »

A group of three miners in hard hats and high visibility vests confer at a rocky mining site.
Broker Notes

Up 66% in a year, just how much more upside does Macquarie tip for Perseus Mining shares?

Just how much higher might Perseus Mining shares soar? Here’s what Macquarie had to say about the ASX 200 gold…

Read more »