Siemens Healthineers, a healthcare subsidiary of Siemens AG, is set to acquire California-based oncology company Varian Medical Systems for $16.4 billion. The all-cash transaction is expected to be the largest medical acquisition of 2020, according to news reports.

The Germany healthcare technology company will be paying $177.5 for each Varian Medical share. This represents a 24 percent premium on Varian Medical's closing price Friday. Despite the economic effects of the coronavirus pandemic Varian Medical's share price has remained stable throughout the year. Based on its current share price the company has an estimated market valuation of about $13 billion.

Siemens Healthineers AG, formerly Siemens Healthcare, said in a statement released Sunday it would be financing the acquisition through debt and equity. This will include a $17.9 billion bridge loan from its parent company Siemens AG. The loan will also reduce Siemens AG's stake in Siemens Healthineers from 85 percent to 72 percent. Market experts have pointed out that the dilution of Siemens AG's stake could pave the way for Siemens Healthineers to be included in Germany's DAX Index.

The acquisition is expected to give Siemens Healthineers, which already owns and operates many healthcare technology companies, a much larger market share in the rapidly growing cancer treatment sector. The company said the deal should bolster its expected earnings per share within the first year after the transaction.

Siemens Healthineers' move to acquire Varian Medical is the latest of several mergers and acquisitions in the health care sector as the coronavirus caused significant shifts in the industry. Mergers and acquisitions activity in the industry has increased in both quantity and value. Last month, Thermo Fisher Scientific Inc. expressed interest in acquiring Qiagen NV for $10 billion. Smith Group Plc. also announced plans for selling its medical equipment business to the highest bidder.

Siemens Healthineers also released its latest quarterly earnings Sunday. For its fiscal third quarter the company reported revenues of around 3.31 billion euros. Earnings before interest and taxes were reported to be around 461 million euros for the quarter. The company upgraded its full-year earnings forecast. It now expects this to be between 1.54 euros and 1.62 euros.

The company, which was spun off from Siemens AG in 2018, said it would be pushing ahead with a planned initial public offering. Siemens Healthineers didn't immediately disclose details of the size and the timeframe the IPO. However, it is expected to be one of the largest offerings in Germany when launched.