The Sirtex Medical Limited (ASX: SRX) share price exploded higher on Wednesday following a takeover offer from California’s Varian Medical Systems, Inc (NYSE: VAR).

Sirtex Medical shares entered a trading halt on Tuesday morning before it filed a trading update after the ASX closed.

The board of Sirtex Medical said it recommends shareholders approve the acquisition by Varian Medical, which values Sirtex at $28 per share or $1.6 billion in total.

Commenting on the takeover (“scheme”) Dr John Eady, Sirtex Medical’s interim Chairman, said, “In recommending the Scheme, we have considered the future potential prospects and the risks associated with an investment in Sirtex.”

“Whilst we remain confident that the Company would continue to have a successful stand-alone future, we believe that the material premium provided by Varian and the certainty of all cash consideration is an attractive outcome for shareholders.”

The cash offer of $28 is 49% higher than Sirtex Medical’s share price of $18.83 earlier in the week, and a steep 77% premium to the three-month average share price.

However, the takeover offer may be bittersweet for some long-term Sirtex Medical shareholders who watched the company’s shares fall from around $40 in 2015 to less than $12 in mid-2017.

For the $15 billion Varian Medical, a $1.6 billion deal for Sirtex Medical adds to its existing efforts in the fight against cancer.

“Sirtex is a highly complementary strategic fit with our existing solutions for the treatment of cancer,” Varian CEO Dow Wilson said. “We are excited by the opportunity to expand Sirtex’s business and continue to provide physicians and patients around the world with smart, efficient, and high-quality care.”

Sirtex said it received “a number of unsolicited, non-binding acquisition proposals” late in 2017 following the huge fallout in its share price, doubt over the efficacy of its products, legal headaches and managerial uncertainty.

An official Varian Medical and Sirtex Medical tie-up is subject to an independent expert report, regulatory and court approval, and ‘no material changes’.

Shareholders are likely to receive their scheme booklets in early-to-mid April, with the implementation of the deal expected in late May.

Sirtex Medical shares were trading 46% higher at $27.50 on Wednesday.

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