Baxter International ($BAX) has inked an agreement to buy Synovis Life Technologies ($SYNO), a provider of biological and mechanical products for soft tissue repair used in a variety of surgical procedures, for an offer price of $28 per share, which equates to $325 million of equity value or approximately $260 million after adjusting for the net cash. The transaction is expected to close in Q1 2012.
The acquisition will expand the portfolio of Baxter's regenerative medicine and biosurgery franchise. Synovis' portfolio includes products used in obesity and vascular surgeries, hernia repair, and for patching the lining of the brain, vessels and cardiac defects.
A Baxter spokeswoman said Richard Kramp, Synovis' president and CEO, will stay in his position "for the time-being," adding the company isn't anticipating any immediate changes. There also will be joint leadership, she said, according to the Minneapolis Star-Tribune.
Analysts were enthusiastic about the deal. "It's a good premium," said Matt Dolan, senior research analyst with Roth Capital Partners, as quoted by the Star-Tribune. "We recently viewed the company as undervalued," he added.
"Baxter is continuing to broaden its offerings with these tuck-in acquisitions," said Mizuho Securities USA's Michael Matson. "It seems to fit well with their regenerative medicine business, extending into the soft tissue area. It's a small company, kind of a niche player, and it does makes sense," he said, as quoted by Bloomberg.
"The medical device business that Synovis has built, and its technical capabilities to develop and manufacture surgical products, is highly complementary to Baxter's existing offering of BioSurgery products," said Ludwig Hantson, president of Baxter's BioScience business, in a release. "The combined business will offer surgeons in the United States and around the world a more complete line of innovative tools used to treat patients."
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