Sirtex juggles rival offers by CDH and Varian

Sirtex shares have swooned after suitor Varian indicated it won’t submit a counter proposal to a $1.87bn Chinese bid.

Sirtex is juggling rival offers.

Chinese group CDH Investments has firmed up its $1.87 billion bid for Sirtex, forcing the target’s board to debate rival offers for the cancer drug developer.

CDH Investments, a China-based alternative asset fund manager with more than $US20bn ($26.5bn) of capital under management, launched a non-binding offer of $33.60 a share more than two weeks ago, which gave it access to due diligence on Sirtex. Following access to the dataroom, the Chinese suitor has confirmed its bid, which is higher than a rival $28-a-share offer from US-based Varian Medical Systems.

The Varian offer, launched in January, was recommended by the Sirtex board and shareholders were set to vote on the deal just days before CDH entered the race.

In a release to the ASX this morning, Sirtex (SRX) noted a statement by Varian to the New York Stock Exchange overnight indicating it would not submit a counter proposal to the offer made by CDH Genetech.

Sirtex reiterated the comments it made yesterday, saying its board would consider both offers.

“Following completion of its assessment of the CDH proposal, the board of Sirtex will provide a recommendation as to which proposal it believes is in the best interests of shareholders,” the company said.

“At this time, the directors of Sirtex continue to unanimously support and recommend the Varian scheme.”

Varian, which is listed on the New York Stock Exchange with a market capitalisation of about $US11.8bn, is described as a leader in developing and delivering cancer care solutions.

Sirtex said Varian had a right to submit a counter-proposal to the CDH bid.

The company also revealed yesterday that its dose sales were below its expectations, with a 10 per cent drop between January and April.

“Since the announcement of the Varian scheme, Sirtex has experienced uncertainty and distraction and this has contributed to dose sales being below expectations,” Sirtex chief Andrew McLean said.

“We believe once the current process has been resolved, the recent growth initiatives implemented will drive positive momentum, and market growth rates are still favourable.”

Sirtex, which treats metastatic liver cancer with its targeted radiotherapy treatment SIR-Spheres, was on a volatile ride last year. Its share price dipped to $11.70 last May after poor study results. The company reviewed its business, cut staff, booked a $90 million writedown and refocused on its core market.

The company also sacked former chief Gilman Wong at the start of last year following a probe into his sale of stock ahead of a plunge in the share price in December 2016.

Mr McLean said earlier this year that spending had been returned to ratios typical of a med-tech company.

At 10.21am (AEST), Sirtex shares were down 4.73 per cent at $28.42.