* Chinese bid was 20 pct higher than Varian offer
* CDH offer was made only days before Varian was to seal deal
* Chinese companies investing heavily in Australian health sector (Updates size of Allan Gray shareholding)
By Tom Westbrook
SYDNEY, June 14 (Reuters) - Australia's Sirtex Medical SRX.AX has picked the highest bidder in a takeover battle for the liver cancer specialist, going with a $1.4 billion Chinese offer that trumped U.S. company Varian Medical Systems (NYSE:VAR) VAR.N .
The eleventh-hour bid from a consortium led by CDH Investments was 20 percent higher than Variant's and represents the latest move in a multibillion-dollar Australian healthcare shopping spree by Chinese investors.
Sirtex Chairman John Eady said CDH's "materially higher" offer of A$33.60 ($25.33) per share, made with its 49 percent partner China Grand Pharmaceutical and Healthcare Holdings 0512.HK , was "superior" and "in the best interests of shareholders".
The deal, which requires shareholder and regulatory approval, also buys CDH and China Grand a chance to market the Sirtex technology in China, which the World Health Organization says accounts for more than half the world's incidences of liver cancer.
"I think they are much better placed to do that than either Sirtex on their own or Varian," said Simon Mawhinney, Chief Investment Officer at fund manager Allan Gray, Sirtex's second-largest shareholder with a 5 percent stake as of May.
"Absolutely we'll vote in favour (of the deal), resoundingly so."
Varian did not respond to a request for comment on Thursday but last month said that it would not match CDH's offer, maintaining that its proposal was superior because it had fully committed financing and had received all necessary regulatory approvals. SWEETENER
Australia has proven an attractive destination for Chinese investment in the healthcare sector, with A$5.5 billion in deals agreed since 2015, according to a report published in January by accountancy firm KPMG. Most of the investment has been from private companies interested in acquiring technology.
"CDH recognises Australia's leadership in medical research and its world-class regulatory system," CDH and China Grand said in a statement from their bid vehicle CHD Genetech Limited.
"In particular, CDH sees significant potential to introduce Sirtex's liver cancer treatment product ... into China."
Founded in 1997 by Bruce Gray, who developed the tiny radiation-impregnated beads that are the basis of the company's liver cancer treatments, Sirtex swung to a full-year loss in 2017 after its technology failed in three major tests.
With Sirtex's shares having halved in value in two years, Varian's A$28-per-share offer landed in January and there had been no engagement with Beijing-based CDH until it weighed in last month, only days before the Varian deal was to be sealed. says its technology is clinically proven and delivers "positive outcomes" for patients with liver cancer. It posted a half-year profit of A$23.6 million in February and will pay Varian about A$16 million for walking away from the deal.
The agreement with CDH was announced after market hours but Sirtex last traded at A$29.62. ($1 = 1.3228 Australian dollars)