Rationale behind Varian Medical’s Acquisition of Sirtex Medical




On January 30, 2018, Varian Medical Systems (VAR) announced that it had entered into an agreement to acquire Sirtex Medical Limited for $1.3 billion.

Varian expects the deal to strengthen its position in the oncology market and accelerate its long-term growth strategy and value-creation framework for establishing itself as a multidisciplinary, integrated cancer care solutions provider.

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Deal rationale

Varian’s acquisition of Sirtex provides it with an opportunity to expand its addressable market into interventional oncology and extend its leadership in the field of radiation medicine. Varian expects the interventional oncology market to expand by ~$1 billion by 2022. Varian expects to accelerate its revenue by expanding its oncology customer base through its acquisition of Sirtex.

The Sirtex business will also be able to leverage Varian’s global operations, oncology software, treatment planning, radiation safety, and image guidance capabilities. Therefore, the acquisition is expected to register expansion in both businesses and provide more comprehensive cancer care to patients.

Management speaks

According to Dow Wilson, president, CEO, and director of Varian Medical Systems, on a recent conference call, “We have a unique opportunity together to expand the global availability of the Sirtex platform as well as leverage Varian’s expertise in treatment planning and delivery, image guidance and processing, oncology practice management software and radiation safety.”

Wilson also stated, “This acquisition advances Varian’s vision of becoming a multimodality cancer care company, expands our addressable market and adds a consumables business to set the foundation for new minimally invasive oncology platform.”

For industry-focused exposure to Varian Medical Systems, investors can consider investing in the iShares U.S. Medical Devices ETF (IHI). IHI holds ~1.9%, 4.4%, 4.2%, and 6.6% in Varian Medical Systems and peers Boston Scientific (BSX), Baxter International (BAX), and Becton, Dickinson and Company (BDX), respectively.


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