Bard to buy out Medicon, its long-standing Japanese JV with Kobayashi

Bard CEO Timothy Ring

C.R. Bard ($BCR) will acquire the outstanding shares of a Japan-based joint venture that it has been invested in for about 40 years with Kobayashi Pharmaceutical, Medicon. The New Jersey-based med tech will acquire Kobayashi's 50% ownership stake for a total of 11.2 billion yen ($93.2 million) doled out over the next 10 years. The purchase is expected to give Bard more of a foothold in the Japanese market.

In 1972, what is now Medicon was established as Nippon Medical. Then in 1975, the company changed its name to Medicon with the JV set up in 1976 as an equal partnership between Bard and Kobayashi.

"As the growth opportunities in Japan evolve, we believe it is time to enhance our presence in the third largest healthcare market in the world, said Bard chairman and CEO Timothy Ring in a statement. "We want to thank our partners at Kobayashi for the more than 40 years of cooperation in building this business together."

Bard invested $21.3 million into Medicon in 2014, with a $23.1 million investment the year prior, according to its annual statement. Medicon sold about $155 million of Bard products into the Japanese market for each of the last three years.

The company said that market segments in Japan have become more clinically differentiated, including those for peripheral vascular and vascular access. So, it intends to take a more direct role in Japanese sales. Bard said it expects the deal to add about $40 million to 2016 net sales from the deal. It said the transaction will be neutral to adjusted cash earnings per share in the fourth quarter of 2015 and for 2016 and to be accretive after that. The deal will lower fourth quarter EPS by $0.05 and full year 2016 EPS by $0.20.

Medicon will pay Kobayashi 3 billion yen ($25 million) at closing with subsequent diminishing annual payment amounts of 1.9 billion yen ($15.8 million) in 2016, 1.5 billion yen ($12.5 million) in 2017, 1.2 billion yen ($10 million) in 2018, 1 billion yen ($8.3 million) in 2019, 600 million yen ($5 million) in each of 2020 and 2021, 400 million yen ($3.3 million) in each of 2022 and 2023, 300 million yen ($2.5 million) in each of 2024 and 2025.

The deal has already been approved by the boards of each company; it is expected to close in early November. Medicon will become a wholly owned subsidiary of Bard.

- here is the announcement