In the May 2006
issue:
Medical Device Merger Mania
The Medical Device sector posted 14 mergers and acquisitions in April. A
total of $4.7 billion, or 59% of the month’s health care M&A funds, was
committed to finance this activity.
...
Two Health Care REITs Join Forces
This just in. Health Care Property Investors is buying CNL Retirement
Properties for $5.2 billion. Just how risky is this deal? Read inside for
the details.
...
April’s M&A Activity
A total of 78 transactions were posted in April. Approximately $8.0
billion was committed to fund these deals.
...
In The Departments
Services
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Health Care Services
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Deal Summaries
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Additional Transactions
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Transaction Updates
Technology
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Health Care Technology
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Deal Summaries
Additional Transactions
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Transaction Updates
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Articles Archive
Companies Mentioned in this issue:
May 2006
1st Medical Network, LLC p8
1st MN p8
A
ABON Pharma p11
ACON Laboratories p10
Alandco Development Co. p8
Allion Healthcare p9
Alteon p14
Amedisys p3
American Securities Capital Partners, LP p10
American Surgery Centers of South Texas p9
AmeriPath p8
Amplifon p14
Amplimedical SpA p14
Armstrong Unicare, LLC p3
Armstrong Uniserve, Inc. p3
Astellas Pharma p15
B
Banc of America Securities p2
Bear Growth Capital Partners p9
Biogen Idec p15
Bruker BioSciences p10
Bruker Optics p10
C
Canyon Creek Development, LLC p4
Cardinal Health p9
CareMatrix p8
Carlyle Senior Living p4
CB Richard Ellis p7
Celera Genomics p11
CenCorp Health Solutions, Inc. p8
Centene Corporation p8
Cirrus Health Partners p9
CLW Health Care Services Group p4
CNL Retirement Properties p1
Cohen & Steers Capital Advisors p2
Columbia Pacific p7
Consumers Life p8
Covance p8
Crdentia Corp. p9
Cytogen p11
D
Danaher Corp. p1
DeMattieus Organization p4
Dental Disposables p10
Diagnostic Products Corporation p10
E
Emerald Estates p7
Emeritus Assisted Living p7
Encore Senior Living p2
Epix Pharmaceuticals p15
Evangelical Lutheran Good Samaritan Society p8
Eximias Pharmaceutical Corp. p16
F
Fibrogen p15
Fisher Scientific p9
Fresno Surgery Center p9
G
Georgian Place p7
Good Samaritan Indian Rock Village p8
Guaranty Bank p4
Gulf Coast Medical Center p4
H
H&H Drug Stores p9
H.H. Hunt p4
HaptoGuard p14
Harris Williams & Co. p4
Health Care Property Investors p1
Health Benefits Direct Corporation p15
Health Care System of Arkansas p8
Health Management Associates p4
Healthcare Administration Technologies p15
HealthSouth Corp. p8
Hickory Hill p8
Hologic p10
Hometown Opportunities p3
Horizon Bay Management p2
I
IC-Research p9
Inova Health System p4
Insurance Specialist Group p15
Integra LifeSciences p10
IntegraCare Corp. p7
Inverness Medical p11
J
J.P. Morgan Securities p11
K
Kaplan Group p8
Kendle International p9
L
Laurel Gardens p4
Lehman Brothers p10
Lexington Gardens p4
M
Magnolias of Chambersburg p7
Magnolias of Lancaster p7
Maple Pointe p4
Marcus & Millichap p4
MedAssist p15
Medical Mutual of Ohio p8
Millipore Corporation p11
Miltex p10
Morrison & Foerster LLP p15
MTS Health Investors, LP p4
N
Nanogen p14
Nanogen Advanced Diagnostics, SrL p14
NovaMed p9
O
Oaktree Capital Management p4
Oncology Holdings p9
One Equity Partners p9
OptiCare Health Systems p8
OTN p9
P
Pfizer p15
Pharmacyclics p11
PNC Financial Services Group p15
PRA International p9
Predix Pharmaceuticals p15
Prince William Health System p4
Progenics Pharmaceuticals p11
Provident Healthcare Partners p9
PSMA Development Company, LLC p11
Q
QualChoice Health p8
Quality Clinical Labs p4
R
R2 Technology p10
Radiant Research p8
Radiation Therapy Services p4
Recordati SpA p16
ResCare p3
Richland Pines p7
Rose Pathology Associates p8
RoundTable Healthcare p15
S
Schawrz Pharma p15
Senior Home Care p3
Senior Housing Investment Advisors p4
Senior Investment Brokerage p8
SeniorCare at the Fountains p8
Serologicals Corp. p11
Siemens AG p10
Siemens Medical Solutions p10
Soliant Health p9
SRI International p4
Staff Search p9
Sterling Synergy Systems p9
Summex Corporation p15
Summit America p7
Summit Partners p3
Sunrise Senior Living p2
Suros Surgical p10
Sybron Dental Specialties p1
T
Tenet Healthcare Corp. p4
The Carlyle Group p4
The Cirrus Group p9
Twin Medical Transaction Services p15
U
UBS Investment Bank p2
UCB Group p16
Universal Health Services p4
W
WebMD p15
WellPoint p8
Western Drug Medical Supply p9
Y
YM BioSciences p16 |
Medical Device Merger Mania
Email Editor
The month of April saw a surge of
dealmaking in the Medical Device sector, with a total of 14 transactions
announced. Based on revealed prices, the total amount spent to fund this
activity was $4.7 billion, or 59% of all M&A dollars spent during the
month. Included in this group are two billion-dollar deals.
In the larger of the two, Danaher
Corp. (NYSE: DHR) is paying $2 billion to acquire Sybron Dental
Specialties (NYSE: SYD), a manufacturer of equipment for the dental
industry. SYD’s portfolio includes products for orthodontics, endodontics
and implants. On a trailing 12-month basis, SYD generated revenue of $659
million, EBITDA of $150 million and net income of $76 million.
The buyer, Danaher Corp., designs,
manufactures and markets a wide variety of industrial and consumer
products, primarily operating in process/environmental controls and tools
and components. On a trailing 12-month basis, DHR generated revenue of
$7.9 billion, EBITDA of $1.35 billion and net income of $897 million.
Under terms of the deal, DHR will launch a tender offer of $47.00 in cash
for each share of SYD common stock outstanding. When $200 million in
assumed debt is added to the total, the purchase price reaches $2 billion.
This transaction, valued at 3x revenue
and 13.3x EBITDA, extends Danaher’s dental portfolio into consumables and
small equipment and offers SYD shareholders a 12.7% premium to its
prior-day closing price. Credit Suisse acted as financial advisor
to SYD in this transaction.
We note that before Danaher made its
move, Sybron announced a smallish acquisition in early April, targeting
New Jersey-based Dental Disposables, which manufactures disposable
infection prevention devices for the dental industry and generates annual
revenue of $5 million. No price was given for this all-cash deal.
In April’s second billion-dollar deal,
Siemens Medical Solutions, a division of Siemens AG (NYSE: SI),
is acquiring Diagnostic Products Corporation (NYSE: DP), a Los
Angeles-based company that develops and manufactures immunodiagnostic
systems and immunochemistry kits. On a trailing 12-month basis, DP
generated revenue of $481 million, EBITDA of $146 million and net income
of $67 million.
Under terms of the deal, SI will pay
$58.80 in cash for each share of DP common stock outstanding for a total
purchase price of $1.86 billion. On completion of the transaction, DP is
to become a wholly owned subsidiary of Siemens Medical Solutions, USA. The
deal, which is valued at 3.87x revenue and 12.7x EBITDA, offers a 21%
premium to DP’s prior-day closing price.
This acquisition extends SI’s health care
solutions portfolio to include a major in vitro immunodiagnostics business
alongside its existing imaging business. This will effectively allow SI to
enter the health care chain at an earlier stage than it currently does.
Lehman Brothers served as financial advisor to DP.
The price tags of the 11 remaining deals
quickly taper off, ranging from $240 million to $1.25 million. Among them
we may cite Hologic’s (NASDAQ: HOLX) $240 million acquisition of
Indianapolis-based Suros Surgical, a company that manufactures
minimally invasive surgical technologies, focused on breast biopsy and
tissue removal. In 2005, Suros generated revenue of $27.2 million, and is
projected to generate $40 million for 2006.
Under terms of the agreement, Hologic
will pay $132 million in cash; the remaining $108 million will be payable,
at HOLX’s election, in cash, stock or a combination of the two. A two-year
earnout is also contemplated.
Hologic believes that this deal will
strengthen its initiative to become and remain a leader in the field of
women’s health care, an ambition which may have translated into a nice
premium for Suros: The deal is worth 6x 2006 projected revenue.
Not wanting to put all its eggs in one
basket, Hologic made a second acquisition in April. It targeted
California-based R2 Technology, a company that develops and
commercializes a computer-aided detection (CAD) technology which assists
radiologists in detecting breast cancer. In 2005 R2 generated revenue of
about $45 million.
Under terms of the deal, Hologic will pay
$220 million in shares of its common stock, which works out to about 4.9x
2005 revenue. The price may be justified, HOLX management reasons,
because this acquisition will put the company in a competitive position as
the market shifts away from analog or film-based systems to CAD sold with
digital mammography systems.
Bruker BioSciences (NASDAQ: BRKR)
is acquiring Bruker Optics for $135 million. Bruker Optics develops
and manufactures research analytical and process analysis instruments. In
2005, it generated revenue of $78.7 million, operating income of $12
million and net income of $6.3 million. This acquisition expands and
diversifies BRKR’s market presence and its technology base.
Under terms of that deal, 59% of the
consideration is to be paid in cash and 41% in shares of BRKR stock.
Taking into account, however, the target’s net cash of $4.3 million, the
effective purchase price drops to $130.7 million, and the price to revenue
multiple to 1.66x.
American Securities Capital Partners,
LP, a New York-based private equity firm, is selling Miltex to
Integra LifeSciences (NASDAQ: IART) for $101 million in cash.
Miltex, based in York, Pennsylvania, provides surgical and dental hand
instruments; in 2005 the company generated revenue of $62 million and
EBITDA of $13 million.
While the seller is cashing out on its
investment, this deal, valued at 1.6x revenue and 7.8x EBITDA, is a strong
strategic fit with IART’s instrument business. Miltex also gives IART a
broader platform on which to grow its business, since Miltex participates
in several markets, namely, the alternate site, dental and veterinary
markets.
Though a British judge turned down a
legal challenge to the author of The Da Vinci Code, other
plaintiffs have fared better in the U.K. courts. San Diego’s ACON
Laboratories is selling its business of developing and manufacturing
lateral flow immunoassays and related products in the U.K. marketplace to
Inverness Medical (AMEX: IMA) for $85.05 million. IMA’s acquisition
of ACON’s U.K. business was in fact negotiated after ACON and a
distributor admitted infringement of one of IMA's U.K. patents covering
immunoassay technology.
Under terms of the deal, consideration is
to consist of $55.1 million in cash, 711,676 shares of IMA stock worth
$18.75 million and $11.2 million to be made in subsequent payments. In a
subsequent, related deal, IMA will acquire ABON Pharma, which owns
a manufacturing facility in China, for between $140 million and $175
million. |
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