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Siemens Healthineers AG. (8/2/20). "Press Release: Siemens Healthineers Plans Acquisition of Varian".

Organisations Organisation Siemens Healthineers AG (Frankfurt: SHL)
  Group Siemens (Group)
  Organisation 2 Varian Medical Systems Inc. (NYSE: VAR)
  Today Varian Medical Systems (Group)
  Group Varian Medical Systems (Group)
Products Product MedTech (medical technology)
  Product 2 oncology
Index term Index term Varian Medical Systems–Siemens: investment, 202008– acquisition $16.4b in cash of Varian Medical Systems Inc by Siemens Healthineers AG ANNOUNCED
Person Person Koebernick, Marc (Siemens 202008 Head of Investor Relations at Siemens Healthineers AG)
     


Siemens Healthineers AG (Frankfurt: SHL) ("Siemens Healthineers") today entered into an agreement with Varian Medical Systems, Inc. (NYSE: VAR) ("Varian"), a global leader in the field of cancer care, pursuant to which Siemens Healthineers shall acquire all shares of Varian for $177.50 per share in cash. This corresponds to a purchase price of Varian of approx. $16.4 billion. In fiscal year 2019, Varian's revenues had amounted to $3.2 billion with an adjusted operating margin of approximately 17 percent.

The Board of Directors of Varian has unanimously approved the conclusion of the agreement and recommends to the Varian shareholders also to approve the agreement. The acquisition of Varian is expected to close in the first half of calendar year 2021, with closing being subject to the Varian shareholders' approval, receipt of regulatory approvals and satisfaction of other customary closing conditions.

The acquisition of Varian is expected to have a positive effect on the adjusted basic earnings per share of Siemens Healthineers within the first 12 months after its closing. Siemens Healthineers aims for EBIT synergies after the closing of the acquisition of at least €300 million per annum in fiscal year 2025. Such synergies will be a mix of revenue and cost synergies, of which the revenue synergies are expected to contribute a significant portion over time.

Siemens Healthineers plans to finance the acquisition of Varian with a mix of debt and equity. Siemens Finance B.V., a subsidiary of Siemens Aktiengesellschaft ("Siemens AG"), which controls Siemens Healthineers and is a related party within the meaning of Sect. 111a Para. 1 Sentence 2 German Stock Corporation Act (Aktiengesetz), will provide Siemens Healthineers for a transitional period with a bridge facility in an amount of €15.2 billion to finance the acquisition price and additional costs and expenses in connection with the acquisition of Varian.

Siemens Healthineers plans to replace up to approximately 50 percent of the amount available under the bridge facility provided by Siemens Finance B.V. through the issuance of equity. For this purpose, Siemens Healthineers intends to increase the share capital by issuing new shares with subscription rights expected to be excluded. In a first step, Siemens Healthineers plans to place new shares without a prospectus, depending on market conditions, still within calendar year 2020. It is planned that the remaining amount under the bridge facility will be refinanced through loans provided by Siemens AG or one of its subsidiaries to Siemens Healthineers at arm's lengths conditions.

The agreement on the bridge facility between Siemens Healthineers and Siemens Finance B.V. was signed on July 31, 2020 with the consent of the competent committee of the supervisory board, subject to evidence of the conclusion of the agreement, and entered into force on August 2, 2020.

The bridge facility has a maximum tenor of 24 months commencing upon closing; it may be early redeemed by Siemens Healthineers and cancelled or accelerated by Siemens Finance B.V. under certain conditions. The bridge facility is unsecured.

The variable and, over time, increasing margin over EURIBOR and LIBOR will range between 43 basis points and 138 basis points (between 63 basis points and 158 basis points for US Dollar amounts). Unused available commitment is subject to a commitment fee of up to 30 percent of some part of the margin. The commitment fee and interest rate upon drawing do not exceed comparable proposals submitted by banks. Should Siemens Healthineers use the bridge facility over the maximum tenor and not early redeem by way of equity or debt refinancings, the maximum consideration under the agreement would amount to up to €540 million.

In connection therewith, Siemens Healthineers Holding I GmbH will, with the consent of the competent committee of the supervisory board, enter into a hedging transaction with Siemens AG to be secured against currency fluctuations of the US Dollar in relation to the purchase price liability. The costs for the hedging transaction are expected not to exceed €160 million. The hedging transaction is in line with market conditions.

On July 31, 2020, Siemens Healthineers, with the consent of the competent committee of the supervisory board, issued a guarantee for the benefit of Siemens AG to secure all liabilities of Siemens Healthineers Holding I GmbH under the hedging transaction. The maximum value attributed to this guarantee equals the costs of the hedging transaction.


Contact:

Marc Koebernick
Head of Investor Relations
Henkestr. 127
91052 Erlangen
+49 (0) 9131-84-2676
marc.koebernick@siemens-healthineers.com


DISCLAIMER:

This announcement is not directed to, or intended for distribution to or use by, any natural person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation of such jurisdiction or which would require any registration or licensing within such jurisdiction. Any failure to comply with these restrictions may constitute a violation of the laws of other jurisdictions.

The Company's securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act.

This announcement includes "forward-looking statements". These statements contain the words "anticipate", "believe", "intend", "estimate", "plan", "expect", "target" and "will" and words of similar meaning. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Siemens Healthineers' financial position, business strategy, the expected financial impact of the acquisition of Varian (including costs and revenue synergies), plans and objectives of management for future operations (including the achievement of costs and revenue synergies) are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Siemens Healthineers to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Siemens Healthineers' present and future business strategies and the market environment in which Siemens Healthineers will operate in the future. Each of the Companies referred to in this announcement, the relevant group entities and their respective affiliates, agents, directors, officers, employees and advisers, expressly disclaims any obligation or undertaking to update any forward-looking statements contained herein. You are urged to consider these factors carefully in evaluating the forward-looking statements in this announcement and not to place undue reliance on such statements.

This document includes - in the applicable financial reporting framework not clearly defined - supplemental financial measures (financial key performance indicators) that are or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures may have limitations as analytical tools and should not be viewed in isolation or as alternatives to measures of Siemens Healthineers' net assets and financial positions or results of operations as presented in accordance with the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe similarly titled alternative performance measures may calculate them differently, which may therefore not be comparable.

Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures to which they refer.

Please find further explanations to our financial key performance indicators in chapter „A.2 Financial performance system" and in the notes to the consolidated financial statements note 29 „Segment information" in the Annual Report 2019 of Siemens Healthineers. Additional information on reconciliations is also included in the Analyst Presentation. These documents are available under the following internet link https://www.corporate.siemens-healthineers.com/investor-relations/presentations-financial-publications.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. The proposed merger will be submitted to the stockholders of Varian for their consideration and approval. In connection with the proposed merger, Varian will file a preliminary proxy statement with the SEC. Once the SEC completes its review of the preliminary proxy statement, a definitive proxy statement and a form of proxy will be filed with the SEC and mailed or otherwise furnished to the stockholders of Varian. Before making any voting decision, Varian stockholders are urged to read the proxy statement in its entirety, when it becomes available, and any other documents to be filed with the SEC in connection with the proposed merger or incorporated by reference in the proxy statement, if any, because they will contain important information about the proposed merger and the parties to the proposed merger. This communication is not a substitute for the proxy statement or any other document that may be filed by Varian with the SEC.

Varian investors and stockholders may obtain a free copy of documents filed by Varian with the SEC at the SEC's website at www.sec.gov. In addition, Varian investors and stockholders may obtain a free copy of Varian's filings with the SEC from Varian's website at http://investors.varian.com/SECfilings or by directing a request by mail or telephone to: 3100 Hansen Way, Palo Alto, CA 94304-1038, United States, F: +1(650)493-4000.

PARTICIPANTS IN THE SOLICITATION

Siemens Healthineers and Varian and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Varian in respect of the proposed transactions contemplated by the proxy statement. Information regarding Varian's directors and executive officers is contained in Varian's Annual Report on Form 10-K for the year ended September 27, 2019 and in the proxy statement for Varian's 2020 annual meeting of stockholders on Schedule 14A, dated December 20, 2019, both of which are filed with the SEC. Additional information regarding the persons who are, under the rules of the SEC, participants in the solicitation of the stockholders of Varian in connection with the proposed transactions, including a description of their direct or indirect interests, by security holdings or otherwise, will be set forth in the proxy statement when it is filed with the SEC, free copies of which may be obtained as described in the preceding paragraph. To the extent holdings of Varian's securities by Varian's directors and executive officers change since the amounts set forth in the proxy statement for Varian's 2020 annual meeting of stockholders or in the proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC.

   
Record changed: 2020-09-04

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