Siemens Healthineers closes $16.4B Varian deal while mulling the sale of its ultrasound division

After announcing a $16.4 billion plan last August, Siemens Healthineers has officially closed its takeover deal for Varian Medical Systems, sealing a bid to equip the latter’s radiation therapies in a cancer care portfolio spanning imaging, diagnostics, treatment and recovery.

And while the ink dries, the medtech giant could also be considering the sale of its billion-dollar ultrasound business, according to a report from Bloomberg. Those potential proceeds could join the $2.7 billion the medtech giant raised last month by selling new company shares to help settle the bill for its all-cash deal.

Varian will now serve as a new business segment within Siemens Healthineers and as a pillar in its “Strategy 2025” revamp scheme, which it expects to produce nearly $360 million in cost cuts annually before the end of that fiscal year.

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The first phase of the company’s strategy was completed with its 2019 IPO, giving it some independence while leaving its corporate parent, Siemens AG, with a large majority stake. It’s currently in its second stage, with a focus on upgrading its offerings alongside the separate acquisitions of Corindus Vascular Robotics and ECG Management Consultants.

Varian, meanwhile, will merge a portfolio of linear accelerators, radiosurgery devices and proton therapy suites with Siemens’ various imaging hardware, laboratory diagnostics and hospital consulting services—while its care management software will fold in with healthcare IT offerings and digital platforms for clinical decision support. As the deal closed, Varian’s common stock ceased trading on the NYSE prior to the market’s opening.

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Meanwhile, Siemens has received interest from a potential suitor for its ultrasound division, Bloomberg reports. Though deliberations are ongoing, the transaction could top $1 billion—a deal that would come as somewhat of a surprise, according to analysts at Bernstein, with ultrasound becoming one of the fastest growing diagnostic modalities.

However, ultrasound is the company’s weakest among its imaging businesses, and it lies outside the radiology suite, where Siemens’ core segments take home first and second place in global market share, they add. With about 8% of the $9 billion international ultrasound segment under its belt—about $790 million in estimated sales for 2019 and 2020—Siemens comes in at No. 4 behind GE Healthcare, Philips and Fujifilm.

According to Bloomberg, the dam has burst for healthcare dealmaking, with M&A numbers up more than 260% compared to the same period last year after the start of the COVID-19 pandemic, totaling $161 billion so far.