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CDH Beats Varian in Bid for Embattled Sirtex

Sirtex Medical said farewell to Varian on Thursday and hitched its wagon to CDH Investments, which had launched a competing bid for Sirtex in May.

Money talked and Sirtex Medical listened.

The New South Wales, Australia-based medical device company that provides a targeted internal radiation therapy for certain liver cancers, said its board decided that the competing bid from CDH Investments was superior to the earlier bid it received from Varian.

In January, Palo Alto, CA-based Varian offered to pay about $1.3 billion (A$28 a share) to acquire Sirtex, and the two companies entered into an agreement, which Sirtex shareholders were expected to approve on May 7. That was until CDH, a major alternative asset management firm based in Beijing, China, swept in with a few days beforehand with a competitive offer of $1.4 billion (A$33.60 a share). Varian was given a chance to counter the offer but declined.

On Thursday, Sirtex said it accepted an amended proposal from CDH that includes its new joint bidder on the deal, Hong Kong-based China Grand Pharmaceutical and Healthcare Holdings (CGP). Aside from the addition of CGP, Sirtex said the proposed terms are "broadly consistent" with CDH's original bid.

This will be the industry's third-largest M&A so far this year. For information on other top medtech deals reported this year, see this recent slideshow.

"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 CEO of Varian. "While disappointed with this decision, Varian's long-term strategy has not changed. We remain focused on becoming a global leader in multi-disciplinary, integrated cancer care solutions; expanding the addressable markets that Varian can impact; and growing and creating sustainable value for our company and our shareholders."

Sirtex will owe Varian a breakup fee of $A16M.

John Eady, chairman of Sirtex, said the board based its decision on "the materially higher offer price and our evaluation of the associated risks."

In January 2017, Sirtex fired CEO Gilman Wong, following an investigation into his share trading revealed he received $2.1 million from the sale of Sirtex stock about a day after he told investors the company expected double-digit dose sales in 2017. Wong was replaced in June 2017 by Andrew McLean.

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