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Australia's Sirtex expects approval for Chinese buyout

* Australia, U.S. regulatory approvals expected - CEO

* Sirtex shares hit highest since October 2016

* Stock still trading 8.4 percent below bid price

By Tom Westbrook

SYDNEY, June 15 (Reuters) - Australian liver cancer treatment maker Sirtex Medical Ltd expects its $1.4 billion buyout by a Chinese consortium to will win regulatory approval in Australia and the United States despite diplomatic tensions with China.

The company agreed on Thursday to an offer from Beijing-based CDH Investments and its partner, China Grand Pharmaceutical and Healthcare Holdings, which trumped a bid from U.S.-based Varian Medical Systems.

Final approval rests with shareholders as well as Australia's Foreign Investment Review Board as relations between Canberra and Beijing sour over allegations of Chinese meddling in Australia's internal affairs.

As Sirtex operates in the United States, the deal also falls within the jurisdiction of the Committee for Foreign Investment in the United States (CFIUS), which has blocked many proposed Chinese investments in American firms in an effort to stop China from acquiring technology.

"We're confident that CFIUS will approve the transaction ... we don't expect FIRB to be an issue at all," Sirtex Chief Executive Officer Andrew McLean told investors on a conference call.

"Sirtex is not involved in the defence or technology sectors and that has most definitely been a recent focus of CFIUS."

The firm's handling of radioactive material in liver cancer treatments was small-scale and could not be "weaponised or used in some inadvertent manner", he added.

Shares in the firm jumped 5 percent at the open of trade on Friday, but at A$31 remain more than 8 percent below the bid price of A$33.60 per share, suggesting at least a few doubts that it will sail through. The broader market rose 1.3 percent.

Morningstar analyst Chris Kallos said China Grand's involvement would probably make the deal more "palatable" for regulators because it showed a commercial motivation for the offer.

"We anticipate the deal will be closed as expected," he said.

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.

But since the sale of the port of Darwin to a Chinese company in 2015 raised national security concerns, the government has been at pains to demonstrate its vigilance over incoming deals from its biggest trading partner.

The FIRB rejected bids by China's State Grid and CK Infrastructure for the nation's biggest electricity network Ausgrid in 2016 and blocked the sale of the country's biggest cattle ranch to Chinese buyers. It is currently considering a $9.8 billion bid by CK Infrastructure for Australia's biggest gas pipeline company, APA Group. (Reporting by Tom Westbrook; Editing by Stephen Coates)

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