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 January
2008
issue:
Health Care M&A Results For 2007--
$226.5 Billion Committed In Second-Largest Year Ever
2007 turned out to be second only to 2006 in the size of its health care
merger and acquisition market. Based on results, a total of 1,051 deals were
announced with a combined value of $226.5 billion.
...
Medical Device Deals Surge--
December Saw 27 Transactions Worth $7.9 Billion
The Medical Device sector ended the year as it
began it, with a spate of deal making. December produced 27 transactions
worth a combined total of $7.9 billion.
...
Fourth Quarter 2007 Health Care M&A Results
The fourth quarter of 2007 generated a total
of 292 mergers and acquisitions in the health care industry. Read the issue to
see which sectors led and which ones lagged.
...
In the Departments
Services
-Health Care Services
-Deal Summaries
-Additional Transactions
-Transaction Updates
Technology
-Health Care Technology
-Deal Summaries
-Additional Transactions
-Transaction Updates
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Articles Archive
Companies Mentioned in this issue:
January 2008
A
Abviva, Inc. p15
Accomplished Diagnostic Medical Inpatient Team, P. p7
Adams Respiratory Therapeutics p16
Adolor p15
Advance Home Care p4
Aegera Therapeutics p10
Ambulatory Services of America p4
American Capital Strategies p6
American Laser Centers p6
Arab Pharmaceutical Manufacturing p16
Argentum Capital Partners p7
Avista Capital Partners p9
B
Baptist Health System p7
BBI Holdings p10
Bio-Kinetic Clinical Applications p7
Boston Scientific Corporation p10
Bristol-Myers Squibb p9
Bruker BioSciences Corp. p9
Bruker BioSpin Group p9
C
Carlyle Seniors Housing p6
Code Hennessy & Simmons, LLC p6
Community Health Systems p4
E
Eastdil Secured p7
Efoora, Inc. p15
Eisai Co. Ltd. p16
Emdeon Business Services p15
F
First Analysis Corp. p7
G
GE Healthcare Financial Services p4
General Atlantic p15
Genesis Bioventures p15
GlaxoSmithKline p16
Golden Gate p6
Gottlieb Health Resources p4
H
HealthTalk p15
Hearthstone Senior Services p7
Hikma Pharmaceuticals p16
Human Genome Sciences p10
I
Idera Pharmaceuticals p10
Illumigen Biosciences p15
Informed Medical Communications p16
Inland Industrial Medical Group p7
Innovative Dialysis Systems p4
Inverness Medical Innovations p6
IPC—The Hospitalist p7
IXT Solutions p15
J
J.P. Morgan Securities p10
JPMorgan p16
L
Lehman Brothers p16
LHC Group p4
Loyola University Health System p4
M
Merck KGaA p10
Merrill Lynch p16
MGI Pharma p16
Morgan Stanley & Co. p9
MorphoSys AG p10
Mountain States Health Alliance p4
N
Nationwide Health Properties p7
Northwest Newborn & Pediatric Services p7
Novartis AG p10
O
OncoMed Pharmaceuticals p16
Optimum Readings p7
P
Pediatrix Medical Group p6
PerkinElmer p6
Pfizer p15
Pin Point Radiology p7
Prion Developmental Laboratories p15
Progenitor Cell Therapy, LLC p15
Q
QPS p7
R
RAI Care Center p4
Reckitt Benckiser p16
Redwood Toxicology Laboratory p6
Renal Advantage p4
Respironics p1
Revolution Health Group p15
Rock Creek Capital Partners p4
Royal Philips Electronics p1
Russell County Medical Center p4
S
Silver Creek p7
St. Mary’s Medical Center p4
StemCells p15
T
The Edgewater Funds p6
Triad Hospitals p4
U
U.S. HealthWorks p7
V
Vanguard Health Systems p7
Vintage Senior Housing, LLC p6
Visicu p9
W
Welsh, Carson, Anderson & Stowe p4 |
Medical Device Deals Surge--
December Saw 27 Transactions Worth $7.9 Billion
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Throughout 2007 the Medical Device sector
has proven itself to be one of the stalwarts of the health care M&A
market. This industry generated the highest level of transactions of any
sector of health care, with 191 deals, or 18% of the year’s total deal
volume. It accounted for 26% of the year’s dollar volume, second only to
Pharmaceuticals. It also produced 12 billion-dollar deals during the
year—one per month—worth a combined total of $40.9 billion.
Thus it comes as no surprise that the Medical Device sector ended 2007 the
same way it began the year, with a strong flourish. It set a blistering
pace in January, when it accounted for 19% of the deal volume and 69% of
the dollar volume. During December, it finished by delivering 27 deals, or
35% of the total deal volume, and $7.9 billion, or 40% of the $19.6
billion committed during the final month of the year.
In the largest deal in the health care industry for December, Royal
Philips Electronics (NYSE: PHG) paid approximately $5.1 billion to
acquire Respironics (NASDAQ: RESP). Based in the Netherlands, Royal
Philips is a well-known conglomerate involved in consumer products,
components, semiconductors, information technology, lighting, professional
products, among other economic sectors. On a trailing 12-month basis,
Philips generated revenue of $38.0 billion and EBITDA of $3.5 billion. The
smaller Respironics, based in Murraysville, Pennsylvania, develops,
manufactures and sells products and programs that service the sleep and
respiratory markets in 141 countries. On a trailing 12-month basis, RESP
generated revenue of $1.24 billion, EBITDA of $246.0 million and net
income of $128.0 million.
Under terms of the transaction, Philips is offering to pay $66.00 in cash
for each share of RESP common stock. This bid works out to 4.1x revenue
and 19.3x EBITDA. It also offers RESP shareholders a 31% premium over the
stock’s prior-day price. On closing, RESP is to become the centerpiece for
the Philips Home Healthcare Solutions division within Philips Healthcare.
What Philips is buying with this deal is Respironics’ global leadership
position in the treatment of Obstructive Sleep Apnea (OSA), as well as a
leading position in noninvasive ventilation. Sleep apnea is commonly
associated with such other disorders as heart disease, stroke and
diabetes. All of these interrelated conditions are on the rise along with
the obesity epidemic that is spreading in the developed world. This
acquisition places Philips in the number one spot to treat OSA as this
epidemic claims an increasingly larger percentage of the population.
Philips made a second, smaller acquisition earlier in December when it
announced the purchase of VISICU (NASDAQ: EICU), a health care
information technology and clinical solutions company based in Baltimore,
Maryland, which provides a remote monitoring system for intensive care
units, for $430.0 million in shares of its stock. Valued at 12.0x revenue
and 50.0x EBITDA, this deal offers EICU shareholders a 35% premium over
the stock’s prior-day price. On the other side of the equation, this
acquisition adds to Philips’ suite of patient monitoring systems, making
it more attractive to acute care facilities seeking to upgrade and expand
their IT systems. Morgan Stanley & Co. provided EICU with advice on
this deal.
The second largest deal in this sector saw the acquisition of privately
held Bruker BioSpin Group by Bruker BioSciences Corp.
(NASDAQ: BKBR) for $914.0 million. Bruker BioSciences designs,
manufactures and markets life science systems and materials research tools
based on mass spectrometry core technology platforms and X-ray technology
while Bruker Biospin designs, manufactures and markets enabling life
science and analytical research systems based on magnetic resonance
imaging, or MRI, technology. Both are located in Billerica, Massachusetts.
Under terms of the transaction, BKBR is paying $388.0 million in cash and
$526.0 million in 57.5 million shares of its common stock to buy Brucker
Biospin. Based on figures annualized from the first nine months of 2007,
the price to revenue multiple is 1.9x and the price to EBITDA multiple is
14.0x.
The acquisition of Bruker Biospin diversifies BKBR’s product line, with
the goal of making the company more attractive to customers in search of
one-stop shopping. The company that will emerge from the combination of
these two is to be called Bruker Corporation.
In the third largest deal, Bristol-Myers Squibb (NYSE: BMY) is
selling its medical imaging unit, one which supplies medical imaging
products for nuclear and ultrasound cardiovascular diagnostic imaging
procedures, to Avista Capital Partners, a New York-based private
equity shop that manages $2.0 billion in private equity capital. Avista is
paying $525.0 million in cash, or 0.8x revenue, to make the purchase. BMY
is selling off this business unit for the purpose of plowing the proceeds
back into its core pharmaceutical business. The imaging unit had a
relatively small array of products, and was not likely to grow rapidly as
a segment of BMY’s overall business, prompting the decision to sell.
J.P. Morgan Securities provided BMY with financial advice in this
transaction.
Avista also announced another sizable deal in this sector days before when
it acquired the fluid management and venous access business of Boston
Scientific Corporation (NYSE: BSX) for $425.0 million in cash, or 2.5x
revenue. Boston Scientific had previously announced the sale of these two
business lines as part of its plan to divest nonstrategic assets to
concentrate on its core business.
Inverness Medical Innovations, which won our contest last month as 2007’s
most active buyer, continued its winning ways in December with two
acquisitions, one of which was the purchase of BBI Holdings (LSE:
BBI) for $170.7 million in stock, or 8.7x revenue (the other is in the
Labs, MRI & Dialysis sector, see page 6). BBI is a Welsh life sciences
company that specializes in developing and manufacturing noninvasive
lateral flow-based rapid diagnostic tests. Under terms of the deal, BBI
shareholders are to receive 0.069 shares of IMA stock for each share of
BBI they own. This transaction thus values each share of BBI stock at GBP
1.95, which represents a 25% premium to its prior-day price. The target’s
lateral flow-based tests will complement IMA’s existing array of
diagnostic tests.
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