Sirtex shares soar on takeover offer from US cancer company
Written on the 31 January 2018 by Ben Hall
Cancer treatment company Sirtex Medical (ASX: SRX) has resumed trading and its shares have surged almost 50 per cent after announcing it has agreed to a $1.6 billion takeover offer from US company Varian.
The liver cancer specialist went into a trading halt on Tuesday ahead of the announcement which revealed that it had agreed to the offer from cancer care firm Varian of an all-cash offer of $28 for each Sirtex share, which is a 49 per cent premium to Sirtex's closing share price of $18.83 on January 29.
Trading in SRX shares resumed on Wednesday and at around midday AEDT, its price was up by 46 percent to $27.50.
"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," says Sirtex interim chairman John Eady.
"Sirtex is a highly complementary strategic fit with our existing solutions for the treatment of cancer," says Dow Wilson, CEO of Varian.
"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 is an Australian-based medical device company which specialises in liver cancer treatment in more than 1,090 hospitals in over 40 countries. It has a market value of $1.05 billion.
Varian, which is listed on the New York Stock Exchange with a market value of $US11.8 billion, is based in California and develops radiotherapy and screening technology to treat cancer.
Sirtex said there were several parties who lodged non-binding takeover offers in late 2017, but accepted Varian's bid as it was considered to be in the best interest of shareholders.
The takeover capped a troubled 2017 for Sirtex. In the past month shares have performed strongly on the back of strong first half earnings of $34 million, which was a 16 per cent increase on the prior corresponding period.
However, the company reported a $26.3 million loss in 2016-17 after writedowns and failed clinical trials, while in January 2017 it sacked its CEO Gilman Wong after an investigation into his trading of Sirtex shares.
Shareholders are expected to vote on the takeover proposal in May, and if approved the deal could be completed by the end of that month.
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Business News Australia
Author: Ben Hall