Varian Medical Systems Inc. (NYSE: VAR) sure saw a pop on Thursday, just a day ahead of earnings from General Electric Co. (NYSE: GE). These two companies might not be tied together on normal days. This time it’s because of merger rumors. Varian shares were up as much as 10% on Thursday after a report that GE might be acquiring the medical devices and equipment company.

While the rumor was issued overseas by a site called Intereconomia.com, 24/7 Wall St. is more interested in what this would mean for General Electric. The story suggested a purchase price of $11 billion to $12 billion. Perhaps what needs to be asked is whether this company would make sense for the likes of a General Electric.

When 24/7 Wall St. issued a full pre-research view of GE’s upcoming earnings for Friday morning, the reality is that analysts and investors have been ratcheting down their targets and expectations on GE for some time. They are even backing away from believing just how much conviction there will be around GE’s prior $2.00 earnings per share target for 2018.

A look at Thomson Reuters shows that Varian is not a hyper-growth company. Its revenue is expected to be $3.2 billion in 2016, then growing to almost $3.4 billion by 2018 and almost $3.6 billion in 2019. Does that really move the needle for a conglomerate the size of GE? And what about earnings? Net income is expected to be $445 million in 2016, and that net income is expected to grow to $500 million in 2018.

What Varian does have going for it is that its gross profit margin is expected to be 42% in 2016 and to remain above 42% in each of the next three years. There is also another issue, and that is something that will be harder to view from the outside. Some companies have a harder time growing independently, but when they become a part of a larger organization they can have stronger contracts and more cost synergies.

GE does have medical and health care operations, which can grow and grow in the years ahead. As of 2015, Thomson Reuters showed that GE’s operations were 21% tied to aviation, 18% tied to power, 15% tied to health care and 14% tied to oil and gas.

As far as how Varian would fit in, it is into medical devices and software products for treating cancer and other medical conditions. It also has many aspects of X-rays and imaging. It operates in many nations as well, something GE is rather used to. Now consider GE Healthcare’s product areas: Anesthesia Delivery, Clinical Consumables, Diagnostic ECG, Mammography, Maternal-Infant Care Radiography, Ultrasound, MRI, Patient Monitoring, Tomography and Surgical Imaging.

Here are some of the recent developments that have been seen inside and outside of Varian:

• The company recently exhibited its new HyperArc Technology for high definition radiotherapy and radiosurgery.
• Varian recently unveiled its first comprehensive software platform for coordinating cancer care in health systems.
• Varian receives FDA marketing approval in September for the Nexus DR Digital X-Ray imaging system.

Apparently Varian’s rumor bulls trimmed their horns a bit around this rumor. Its shares were last seen at $100.21 but trading volume of 7.7 million shares right before the closing bell was over 10 times normal volume. Varian hit a new high of $106.70 on the peak of Thursday’s rumors. Its market cap right at the close was $9.4 billion.

For whatever it is worth, Varian’s consensus analyst price target is $95.23. Its street-high target is only $102. Could GE pay up higher? Sure. Will it? Maybe, maybe not.

GE’s strategy has been considered one of bolt-on acquisitions of late. That being said, it also has been selling off units and operations that are seemed non-core operations. GE’s market cap is $261 billion, and its expected 2016 revenue is $126 billion.

It is really difficult to know if Varian would make much of a difference for GE. Any growth can help, but it depends on what a buyer like GE could do on top of what Varian can do on its own. Stay tuned. GE reports earnings on Friday morning.

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