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'No surprise' at huge Sirtex takeover bid

Trevor Chappell  |  31 Jan 2018Text size  Decrease  Increase  |  
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MELBOURNE - [AAP] The head of Sirtex Medical (ASX: SRX) says he is not surprised US suitor Varian Medical offered a 49 per cent share price premium in its $1.6 billion takeover offer for the Australian cancer treatment developer.

Sirtex CEO Andrew McLean says he was "not at all" surprised by Varian's offer, which at $28 for each Sirtex share represents a 49 per cent mark-up on the January 29 closing price of $18.83, and a 60 per cent premium to the average price over January.

"Sirtex is a wonderful business with strong prospects," Mr McLean said on Wednesday.

"We presented our strategic plan moving forward, and they have got all the data as to current performance and past performance.

"They would have modelled it out and come up with a number, so anything else is pure speculation on my part."

Mr McLean said Sirtex had received a number of unsolicited takeover proposals from credible parties late in 2017 and the company had subsequently engaged with additional parties for an offer that was in the best interests of Sirtex shareholders.

"We decided that given the premiums on offer that we had to fully explore those offers," Mr McLean said.

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"The Sirtex board did not put the business up for sale."

Mr McLean said he could not speculate on the chances of an even bigger offer than that made by Varian.

"It is a very attractive premium and what's reflected in that is the future and long-term growth potential of Sirtex," he said.

Varian has said that the addition of Sirtex's interventional cancer treatment platform will provide customers of both companies with a wider range of cancer care solutions.

Sirtex announced Varian's offer on Tuesday night, with the Sirtex board unanimously endorsing the Californian company's all-cash offer.

Sirtex shares soared when they resumed trading on Wednesday, hitting an intra-day high of $27.70 and remaining at $27.44--up $8.62 or 45.8 per cent, at 1222 AEDT.

The stock was last at that level in December 2016, before an eventful and troubled 2017 for the company.

Sirtex suffered a $26.3 million full-year loss in 2016/17 after making a $90 million writedown.

The company's shares plummeted below $11 in May after unfavourable results for a clinical trial, while in January the company sacked its former CEO, Gilman Wong, after an investigation into his trading in the company's shares in 2016.

But Sirtex's fortunes and share price have improved in 2018, after the company gave a trading update on January 17 flagging improved first-half earnings and a turnaround in second-half sales.

Sirtex distributes a radiation therapy to more than 1,090 hospitals in more than 40 countries.

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.

 

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© 2021 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

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