CDH makes $1.4b bid for Australia's Sirtex Medical

CDH’s unsolicited and non-binding offer is for A$33.60 per share, which represents a 78% premium to the January 29 closing price – the last trading day before Varian’s interest became known. The Sirtex board endorsed a bid from the US-listed company of A$28.00 per share, although it is now seeking to delay the vote so the CDH proposal can be considered, according to a filing. Sirtex’s stock gained 5.6% on May 4 to close at A$29.42, its highest level in 18 months.

The company is a medical device manufacturer specializing in selective internal radiation therapy, which is a minimally invasive surgical technique used to treat liver tumors. More than 86,000 doses of Sirtex’s resin microspheres have been supplied to treat patients in 1,160 medical centers across 40 countries. Clinical evidence cited by the company suggests that the microspheres may approximately double the rate of tumor shrinkage and remission.

Dose sales reached 12,578 units in the 2017 financial year, with the Americas accounting for 70% of demand compared to 21.3% for Europe, the Middle East, and Africa, and 8.7% for Asia Pacific. Revenue for the year came to A$234.3 million, up from A$232.5 million in 2016, but the company swung from a net profit of A$53.6 million to a net loss of A$26.3 million. The loss was primarily due to asset write-offs related to clinical studies and R&D development programs.

Varian, which has a market capitalization of $10.7 billion, also focuses on cancer treatments, with a portfolio of devices that deliver radiation therapy and proton therapy. Dow Wilson, the company’s president and CEO, noted that the Varian scheme of arrangement has been approved by both boards of directors, has fully committed financing, and has received all necessary regulatory approvals. As such, he sees it as offering more value and carrying less risk than the CDH proposal.

CDH is currently raising its sixth US dollar-denominated fund, which has a target of $2.5 billion. The private equity firm concentrates on China but will make investments overseas where there is a China angle. It has previously acquired beef processing assets in Australia and a health supplements business in New Zealand.

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• Topics
• Australasia
• Greater China
• Healthcare
• Buyouts
• Australia
• China
• CDH Investments Management