Siemens Healthineers wants to buy U.S. firm Varian for $16.4 billion, the German medical technology company announced Sunday.

Varian's shareholders are to receive $177.5 per share, about a quarter more than the shares' value on Friday evening.

The U.S. firm's board has approved the plan and is recommending that shareholders accept the offer.

Healthineers, spun off by Siemens in 2018, are offering newer products including tests for the novel coronavirus, alongside X-ray and MRI machines.

Varian, a producer of medical equipment based in California, specializes in cancer care.

The two companies have collaborated for more than a decade in areas such as radiotherapy diagnostics for cancer treatments, according to media reports.

Varian had sales of $3.2 billion in the past fiscal year, with an operating margin of 17%.

Siemens Healthineers plans to finance the acquisition half through loans and a half through new equity that is to be raised by issuing new shares.

Its acquisition of Varian is subject to the approval of the latter's shareholders and regulatory approvals and is expected to be completed in the first half of 2021.