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.
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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.
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