Item 1.01. Entry
into a Material Definitive Agreement.
On August 2, 2020, Varian Medical Systems,
Inc., a Delaware corporation (the “Company”), Siemens Healthineers Holding I GmbH, a company organized under
the laws of Germany (“Parent”), Falcon Sub Inc., a Delaware corporation and a direct wholly-owned subsidiary
of Parent (“Merger Sub”), and, with respect to certain provisions, Siemens Medical Solutions USA, Inc., a Delaware
corporation (the “Guarantor”), entered into an Agreement and Plan of Merger (the “Merger Agreement”),
pursuant to which, among other things, Merger Sub will be merged with and into the Company (the “Merger”), with
the Company surviving the Merger as a wholly owned subsidiary of Parent. At the time the Merger becomes effective (the “Effective
Time”), each share of common stock, par value $1.00 per share, of the Company (“Company Common Stock”)
outstanding immediately prior to the Effective Time, other than (a) shares of Company Common Stock (“Shares”)
owned by Parent, Merger Sub or the Company (unless held on behalf of third parties), (b) Shares held by stockholders of the Company
who have properly exercised and perfected appraisal rights under Delaware law and (c) Shares underlying or comprising unexercised,
unvested or unsettled equity awards, will be cancelled and converted into the right to receive cash in the amount of $177.50 per
share (the “Merger Consideration”).
Pursuant to the Merger Agreement, as
of the Effective Time, (a) each option to purchase a share of Company Common Stock and each stock appreciation right granted
under the Company’s stock plans that is outstanding immediately prior to the Effective Time will become fully vested
and be converted into the right to receive a cash payment equal to the Merger Consideration, net of the exercise price, and
(b) each other stock-based award that is outstanding immediately prior to the Effective Time will become fully vested and be
converted into the right to receive a cash payment equal to the product of the Merger Consideration and the number of shares
subject to the award. For outstanding options and stock-based awards that vest in whole or in part based on the achievement
of performance goals, the level of performance goal achievement will be determined based upon target performance.
Concurrently with the execution of the Merger
Agreement, Siemens Healthineers AG, the ultimate parent company of Parent (“Siemens Parent”), delivered a letter
of support to the Company (the “Letter of Support”), providing that Siemens Parent (a) guarantees the performance
and discharge of all covenants, agreements, obligations and liabilities of Parent, Merger Sub and the Guarantor under the Merger
Agreement, (b) agrees that it will perform and discharge all covenants, agreements, obligations and liabilities of Parent under
certain specified covenants of the Merger Agreement as if it were Parent under the Merger Agreement and (c) agrees to provide all
support and funds necessary in connection with the foregoing and agrees to cause its affiliates to honor the satisfaction of all
covenants, agreements, obligations and liabilities of Parent, Merger Sub and the Guarantor under the Merger Agreement.
The Board of Directors of the Company (the
“Board”) has unanimously approved the Merger Agreement, the Merger and the other transactions contemplated thereby.
The closing of the Merger is subject to the adoption of the Merger Agreement by the affirmative vote of the holders of at least
a majority of the outstanding Shares entitled to vote (the “Company Stockholder Approval”). The closing of the
Merger is also subject to various customary conditions, including the expiration or termination of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; receipt of specified regulatory approvals; receipt
of the approval of the Committee on Foreign Investment in the United States (“CFIUS”); the absence of any newly
enacted law, injunction or order prohibiting the Merger; the accuracy of the representations and warranties contained in the Merger
Agreement (generally subject to a material adverse effect qualification); compliance in all material respects with the covenants
and agreements in the Merger Agreement; and absence of a Company Material Adverse Effect (as defined in the Merger Agreement) on
the Company since the date of the Merger Agreement that is continuing.
The Company has made customary representations,
warranties and covenants in the Merger Agreement, including, among others, covenants (a) to use commercially reasonable efforts
to conduct its business in all material respects in the ordinary course during the period between the execution of the Merger Agreement
and the closing of the Merger, subject to certain exceptions, (b) not to engage in specified types of actions during this period,
subject to certain exceptions, (c) subject to certain exceptions, to convene and hold a meeting of its stockholders for the purpose
of obtaining the Company Stockholder Approval and (d) subject to certain exceptions, not to solicit or negotiate alternative proposals
or withdraw, modify or qualify in a manner adverse to Parent or Merger Sub the recommendation of the Board that the Company’s
stockholders approve the adoption of the Merger Agreement.
The Merger Agreement contains certain
termination rights, including that either party may terminate the Merger Agreement if, subject to certain exceptions and
limitations, the Merger has not closed by August 2, 2021 (subject to an automatic extension to October 2, 2021 and an
additional automatic extension to December 2, 2021, if on such date all of the closing conditions except those relating to
regulatory approvals and CFIUS approval have been satisfied or waived) (the “End Date”). Additionally, the
Company may terminate the Merger Agreement under specified circumstances to accept an unsolicited superior proposal from a
third party and Parent may terminate the Merger Agreement if, before the Company Stockholder Approval has been obtained, the
Board changes its recommendation that the Company’s stockholders approve the adoption of the Merger Agreement.
The Merger Agreement provides that, upon
termination of the Merger Agreement by the Company or Parent under specified circumstances (including termination by the Company
to accept a superior proposal), a termination fee of $450 million will be payable by the Company to Parent (if Parent so elects).
The Merger Agreement also provides that
a reverse termination fee of $925 million will be payable by Parent to the Company (if the Company so elects) if the Merger Agreement
is terminated by the Company or Parent under certain specified circumstances (including as a result of failing to obtain regulatory
approvals (other than the CFIUS approval) by the End Date).
The Merger Agreement also provides that
a reverse termination fee of $450 million will be payable by Parent to the Company (if the Company so elects) if the Merger Agreement
is terminated by the Company or Parent under certain other specified circumstances (including as a result of failing to obtain
CFIUS approval by the End Date).
The Merger Agreement also provides that
either party may seek to compel the other party to specifically perform its obligations under the Merger Agreement.
The foregoing description of the Merger
Agreement and the Letter of Support does not purport to be complete and is qualified in its entirety by reference to the Merger
Agreement and the Letter of Support, which are filed as Exhibits 2.1 and 2.2, respectively, to this Current Report on Form 8-K
and incorporated herein by reference.
The Merger Agreement and the Letter of Support
have been included to provide investors with information regarding their terms. They are not intended to provide any other factual
information about the Company. The representations, warranties and covenants contained in the Merger Agreement and the Letter of
Support were made only for purposes of the Merger Agreement and the Letter of Support as of the specific dates therein, were solely
for the benefit of the parties to the Merger Agreement and the Letter of Support, may be subject to limitations agreed upon by
the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual
risk among the parties to the Merger Agreement and the Letter of Support instead of establishing these matters as facts, and may
be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors
are not third-party beneficiaries under the Merger Agreement or the Letter of Support and should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties
thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations
and warranties may change after the date of the Merger Agreement and the Letter of Support, which subsequent information may or
may not be fully reflected in the Company’s public disclosures.