Goodbye, Varian! Sirtex Accepts Chinese Firm’s $1.4 Billion Counter Bid

Australia-based liver cancer specialist Sirtex Medical’s board has decided to back Chinese CDH Investments’ $1.4 billion bid (A$1.9 billion) for the company over Varian Medical Systems’ previous $1.3 billion offer.
 
CDH’s last-minute bid of A$33.60 per share represented a more complicated offer than Varian’s, but the board ultimately decided it was a better deal. Sirtex Chairman John Eady told Reuters the “materially higher” offer was “superior” and “in the best interests of shareholders.”
 
Consistent with Varian’s previous announcements, the company declared it would not offer a counter proposal. Sirtex has already terminated the Varian scheme and will pay a reimbursement fee of about A$16 million to Varian.
 
“Varian is very disciplined in its business development approach and we do not see value beyond the A$28 price per share we offered for Sirtex,” said Dow Wilson, president and CEO of Varian in a statement made yesterday shortly after Sirtex’s announcement. “While disappointed with this decision, Varian’s long-term strategy has not changed. We remain focused on becoming a global leader in multi-disciplinary, integrated cancer care solutions; expanding the addressable markets that Varian can impact; and growing and creating sustainable value for our company and our shareholders.”
 
According to The Sydney Morning Herald, CDH manages approximately $20 billion of assets. The company was established in 2002 with portfolio companies in China, Asia, and globally. The investment firm notes not only the significant potential to launch Sirtex’s SIR-Spheres Y-90 resin microspheres not only in China—where liver cancer is a leading cause of death—but also across the world.
 
“CDH is committed to Sirtex’s existing operations in the U.S., Europe, Asia, and Australia,” CDH chief executive Jiao Shuge told The Sydney Morning Herald. “While China is an obvious opportunity, given it is where more than half of the world’s liver cancer incidences occur, we also plan significant investments to accelerate the company’s growth in countries where it does not currently have a meaningful presence.”
 
Australia has recently been an alluring region for Chinese investment in healthcare, with A$5.5 billion spent in deals since 2015, according to a report published in January by accountancy firm KPMG. Much of the investment activity has resulted from private companies acquiring technology.