Siemens Healthineers (ETR: SHL) will acquire Varian Medical Systems (NYSE:VAR) in a $16.4 billion deal to create what the companies say will be the most comprehensive cancer care portfolio in the industry.
SHL shares closed down –8.95% to €40.02 apiece in trading in Germany today, while VAR shares are up 21.61% to $173.57 apiece as of midday NYSE trading. MassDevice’s MedTech 100 Index — which includes stock prices of the world’s largest medical device companies — is up 1.2% as of midday.
Both companies today also reported sales declines due to the COVID-19 pandemic, which has caused a reduction in healthcare procedures not related to the coronavirus.
The merger is slated for completion during the first half of 2021, pending approval of shareholders, regulatory approvals and other customary closing conditions. The deal, according to the companies, will combine complementary diagnostic tools, imaging, radiotherapy and AI capabilities to enable a digital transformation of oncology healthcare.
“In addition to delivering immediate and compelling value to our shareholders, the combination with Siemens Healthineers brings us even closer to realizing our transformative vision of a world without fear of cancer. Siemens Healthineers’ innovative leadership in detection and diagnosis will extend our ability to serve clinicians and patients from the very first stage in the fight against cancer,” Varian CEO Dow Wilson said in a news release.
Siemens Healthineers CEO Bernd Montag said the merger represents a “leap in the fight against cancer and a leap in our overall impact on healthcare.”
“This decisive moment in the history of our companies means more hope and less uncertainty for patients, an even stronger partner for our customers, and for society more effective and efficient medical care,” Montag said.
The deal seems to fulfill PwC’s recent prediction that there will be a “need for significant consolidation as companies work to remain competitive” amid the financial strains caused by the pandemic.
Erlangen, Germany–based Siemens Healthineers reported profits of €271 million, or €0.30 per share, on sales of €3.3 billion for the third quarter ended June 30, 2020, for a bottom-line slide of –23% and a top-line decline of –7.2% compared with Q3 2019.
Assuming that the present business environment doesn’t deteriorate again, Siemens Healthineers expects broadly flat revenue growth during fiscal year 2020; with adjusted earnings per share between €1.54 and €1.62.
“For the fourth quarter, we are anticipating a significant improvement of our business performance compared to the third quarter,” Montag said.
Palo Alto, Calif.–based Varian meanwhile reported profits of $61.2 million, $0.67 per share, on sales of $694.3 million for the third quarter ended June 30, doubling its bottom line even as sales declined –16% compared with Q3 2019.
Adjusted to exclude one-time items, earnings per share were 78¢, 26¢ ahead of The Street, where analysts were looking EPS of 52¢ on sales of $664.4 million.