Sirtex prefers US$1.4 billion CDH-CGP bid to Varian’s acquisition offer

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Sirtex has announced entering into a binding scheme implementation deed with CDH Genetech (CDH) and China Grand Pharmaceuticals and Healthcare Holdings Limited (CGP). It has also announced the termination the Varian Scheme in relation to the proposed Sirtex acquisition.

Sirtex shareholders will be entitled to A$33.60 in cash for each Sirtex share held if the CDH-CGP Scheme is implemented. The Scheme Consideration represents a 20% premium to the Varian offer price of A$28 per Sirtex share, an announcement from Sirtex states.

Background to the CDH-CGP Sirtex acquisition bid

On 30 January 2018, Sirtex announced it had entered into a binding Scheme Implementation Deed with Varian Medical Systems under which it was proposed that Varian acquire 100% of the shares in Sirtex by way of a Scheme of Arrangement for A$28.00 per share.

Subsequently, on 4 May 2018, prior to the Varian Scheme Meeting to approve the Varian Scheme, Sirtex received an unsolicited non-binding, indicative and conditional proposal from CDH Investments to acquire 100% of Sirtex for a cash price of A$33.60 per share. On 5 May 2018, Sirtex announced the adjournment of the Varian Scheme Meeting.

On 22 May 2018, Sirtex announced it had received an offer capable of acceptance from CDH for the acquisition of all of the shares in Sirtex by way of scheme of arrangement, including a draft scheme implementation deed.

On 14 June 2018, Sirtex announced the termination of the Varian Scheme and that it was entering into a binding scheme implementation deed with CDH and CGP. CDH Genetech is an entity wholly-owned by funds advised by CDH Investments.

The interim chairman of Sirtex, John Eady, said: “The Board has undertaken a comprehensive investigation of the merits and risks of the CDH-CGP proposal, including seeking specialist advice in relation to specific regulatory, legal, funding and other risks. Based on the materially higher offer price and our evaluation of the associated risks, the Board of Sirtex has formed the unanimous view that the CDH-CGP proposal is a superior proposal and is in the best interests of shareholders.”

The CDH-CGP Scheme is subject to independent expert review on behalf of shareholders, shareholder approval, and regulatory and legal approvals.

An announcement from Sirtex notes that the Sirtex board unanimously recommended that Sirtex shareholders vote in favour of the CDH-CGP scheme and intend to vote shares in their control in favour of the proposed CDH-CGP scheme, subject to Sirtex not receiving a superior proposal and the independent expert concluding that the CDH-CGP scheme is in the best interests of Sirtex shareholders.

On completion of the CDH-CGP Scheme, Sirtex will be ultimately owned 51% by funds advised by CDH, and 49% by CGP, the announcement from Sirtex adds.

Varian provides update on proposed Sirtex acquisition

Varian announced on 14 June that it received notification from Sirtex that its board has determined that the proposal from CDH Investments and China Grand Pharmaceutical and Healthcare Holdings Limited (CDH-CGP Proposal) is a Superior Proposal as defined in the Scheme Implementation Deed between Sirtex and Varian (Varian Scheme). Consistent with Varian’s prior announcements, Varian informed Sirtex that Varian will not be providing a counter proposal. Sirtex has consequently terminated the Varian Scheme and confirmed that it is required to pay a Reimbursement Fee of approximately A$16 million to Varian.

“Varian is very disciplined in its business development approach and we do not see value beyond the A$28 price per share we offered for Sirtex,” said Dow Wilson, president and chief executive officer of Varian.  “While disappointed with this decision, Varian’s long-term strategy has not changed. We remain focused on becoming a global leader in multidisciplinary, integrated cancer care solutions; expanding the addressable markets that Varian can impact; and growing and creating sustainable value for our company and our shareholders.”

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