September 3, 2020 Blog Post
This post is courtesy of MD+DI. Return of the Billion Dollar Medtech Deal
It seems as if today’s climate would call for smaller tuck-in deals. But the opposite is happening in medical devices and diagnostics. The industry has seen larger more robust deals that are stretching past the billion-dollar mark. Teladoc Health’s $16.5 billion bid to acquire Livongo holds the record of being one of the largest deals to be announced during the pandemic era (so far). The acquisition is fueled by the rise in demand for virtual health. But more million-dollar deals beyond the virtual health space are happening – such as the proposed Siemens Healthineers/Varian merger. Siemens Healthineers said it would acquire Varian Medical Systems for $16.4 billion. The deal would give Erlangen, Germany-based Siemens Healthineers a greater runway into cancer care. Siemens Healthineers is acquiring Varian for $16.4 billion in perhaps one of the largest
medtech deals in the pandemic era to date. The merger would give Erlangen, Germany -based Siemens Healthineers a broader reach into cancer care. The all-cash transaction is set to close in the first half of 2021. Siemens would pick up all Varian shares for $177.50 each in cash. This represents a 24% premium to Palo Alto, CA-based Varian’s closing price on Friday. "Today's announcement represents an important milestone in our company's history, and our Board is confident that this is the right path forward for Varian," Dow Wilson, President and CEO of Varian, said in a release. "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. And, we will be positioned to transform care for a greater number of patients worldwide." The deal comes on the heels of Siemens Healthineers announcing it was developing the Fast Track Diagnostics SARS-COV-2 assay. The company inherited the COVID-19 assay when it acquired Luxembourg-based Fast Track Diagnostics in December of 2017. Marie Thibault, a medtech analyst at BTIG and a former managing editor at MD+DI, wrote in a research note that Varian and Siemens already had a mutual marketing and development relationship dating back to 2012.
“While unexpected — we viewed Varian as a routine acquirer but did not think the company was a likely near-term acquisition target — we do think the transaction makes sense given the two c ompanies’ product portfolios and existing collaboration,” Thibault wrote in a research note. Although [Siemens Healthineers] exited its linear accelerator business at the end of 2011, Varian business has shifted considerably in recent years, with service and software adding growth and more favorable margins vs the legacy hardware business. Siemens believes adding Varian’s capabilities and products will allow it to address the issue of fragmented cancer care by enabling earlier diagnosis and precise, targeted therapies powered by artificial intelligence.” Thoughts? Please comment below …
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