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Week ending June 19, 2015:
Recent Healthcare M&A Deals
Medical Devices
Acquirer
Target
Price
Hill-Rom Holdings, Inc.
Welch Allyn, Inc.
$2.05 billion
XIO Group, LLP
Lumenis Ltd.
$510 million
Teva Pharmaceuticals Industries Ltd.
Drug delivery collaboration
$93 million
Other Services
Recipharm AB
OnTarget Chemistry
$1.84 million
VS Health Corporation
Target’s pharmacy and clinic business
$1.9 billion
Allergan Adds Kythera to Smooth Its Profile
Allergan plc (NYSE: AGN), formerly known as Actavis plc, wasted no time in acquiring another publicly traded company. Last week, Allergan picked up Kythera Biopharmaceuticals, Inc. (NASDAQ: KYTH) for $2.1 billion, payable 80% in cash and 20% in new AGN shares issued to KYTH shareholders. Kythera’s only marketed product is Kybella™, an injectable drug that is the first and only approved, non-surgical treatment for double chin. The acquisition is expected to be breakeven in 2016 and accretive thereafter. Actavis, er, Allergan remains committed to de-levering to below 3.5x debt to Adjusted EBITDA by the end of the first quarter of 2016.
The Giant Health Insurers Are Circling
It began in May, with Humana Inc. (NYSE: HUM) publicly declaring it was exploring a sale. That announcement ignited the smoldering rumors that have been swirling around the healthcare industry since the beginning of 2015: Expect a lot of consolidation in the Managed Care sector this year. By mid June The Wall Street Journal reported that UnitedHealth Group (NYSE: UNH) approached Aetna Inc. (NYSE: AET) with an offer, and that Anthem (NYSE: ANTM) and Cigna (NYSE: CI) were engaged in merger talks. We checked our DealSearchOnline database to see how each of the top five spent on managed care targets since 1994. Check ’em out.
Health Insurers’ M&A Spending on Managed Care Targets, 1994 t0 2015
Acquirer
Number of deals completed
Price
Aetna
14
$13.3 billion
Anthem
10
$21.1 billion
Cigna
13
$8.0 billion
Humana
22
$4.3 billion
UnitedHealth Group
31
$34.8 billion
Source: The Health Care M&A Information Source, June 19, 2015
Independent Welch Allyn Sells for $2.05 Billion
Welch Allyn, Inc. was a quiet, family-run global medical device company, based in the Finger Lakes region of New York State. We knew the peace couldn’t last. Sure enough, last week Hill-Rom Holdings, Inc. (NYSE: HRC) agreed to pay $2.05 billion for the Skaneateles Falls-based company that makes those physical examination instruments and accessories you so look forward to seeing whenever you visit your doctor. It also makes EMR-connected vital signs and cardiac monitoring devices, with the aid of 2,600 people in 26 countries. Hill-Rom Holdings operates as a medical technology company, and its financial advisors at Goldman, Sachs & Co. expect this transaction to generate $2.6 billion in revenues and more than $500 million in adjusted EBITDA.
Joint Venture Buys Regal Lifestyle Communities
Another good REIT story was made in the long-term care sector. Last week Health Care REIT, Inc. (NYSE: HCN) one of the largest diversified healthcare REITS in the country, agreed to pay $623 million for Regal Lifestyle Communities Inc. (TSX: RLC). Regal operates 23 independent living communities with more than 3,600 units—13 in Ontario, seven in Quebec, and one each in British Columbia, Saskatchewan and Newfoundland. Far-flung as that sounds, about 83% of the NOI is derived from four large metro markets. HCN will be buying this portfolio in an existing RIDEA joint venture with Revera, Inc., with HCN owning 75% and Revera 25%…………………………Click here for a free trial to The Health Care M&A Information Source and download the current issue today.
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