Health Care Deal News: Spotlight on Medical Devices - April 2012

In March’s largest deal in any sector of health care, Boston Scientific (NYSE: BSX) is offering to acquire Cameron Health for as much as $1.35 billion. Based in San Clemente, California, Cameron’s S-ICD wireless system is the only commercially available subcutaneous implantable defibrillator. This defibrillator does not touch the heart and blood vessels and so may offer competitive advantages over conventional defibrillators which pass through the venous system and into the heart. Under terms of the deal, BSX will pay $150.0 million upfront; $150.0 million on approval of the S-ICD wireless system; and up to an additional $1.05 billion in revenue-based milestones over a six-year period. This acquisition expands BSX’s cardiac rhythm management business.

Covidien plc (NYSE: COV) announced two deals in March. In the larger of the two, it is buying superDimension for $300.0 million. Based in Israel, superDimension develops minimally invasive interventional pulmonology devices. This deal, valued at 10x revenue, gives COV access to the target’s proprietary i-Logic System, which uses electromagnetic navigation bronchoscopy to provide minimally invasive access to lesions in the lungs as well as mediatinal lymph nodes. Besides the $300.0 million noted above, the agreement also contains provisions for future earnout payments. In the smaller of its two deals, COV is acquiring Newport Medical Instruments for $108.0 million. Based in Costa Mesa, California, Newport Medical is a manufacturer of ventilators. This acquisition brings the buyer into the ventilator market; the target’s devices are currently sold in the United States and in over 115 countries. COV plans to report the Newport Medical business as part of its Airway & Ventilation product line.

Varian Medical Systems (NASDAQ: VARI) is acquiring InfiMed, a supplier of workstations, including hardware and software, for processing diagnostic X-ray images, for $15.0 million, or 1.0x revenue. The sellers may also receive additional earnouts over the next 24 months. InfiMed will be part of VARI’s X-Ray Products Segment.

A Work In Progress. Roche Holding (VX: ROG) continues its pursuit of Illumina (NASDAQ: ILMN). It has raised its initial bid of $44.50 per share, made in January, by 15% to $51.00 for a total purchase price of $6.7 billion. That raises the price to revenue multiple from 5.2x to 6.1x. Part of the reason for the increase was that the markets had raised ILMN’s stock price to the $50.00 level. Perhaps hankering after the good old days, ILMN’s board appears to be holding out for an offer approaching $70.00 per share, a level we believe Roche is disinclined to consider. We’ll have to wait to see who blinks first............Want to read more? Click here for a free trial to The Health Care M&A Monthly and download the current issue today