C.R. Bard ($BCR) will buy micro-cap home medical device distributor Liberator Medical Holdings ($LBMH) for about $181 million. That's $3.35 per share, which is a 26% premium to its closing price the day before the deal was announced on Nov. 19.
For their part, Bard investors gave the deal an initial thumbs-up, driving its share price up about 3% in early trading on the acquisition news. The deal has been signed off by each company's board, but it now must make its way through Liberator shareholder and regulatory approvals.
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| C.R. Bard CEO Timothy Ring |
Liberator is a direct-to-consumer distributor of medical products classified as Durable Medical Equipment (DME). The U.S. is expected to spend $71.3 billion by 2023 on DME, according to the Centers for Medicare and Medicaid Services (CMS). That's up massively from $45.8 million anticipated for the DME market this year, as the American population continues to age and healthcare shifts more into the home.
"This acquisition is a key building block in our strategy to access faster growing markets," said Bard chairman and CEO Timothy Ring. "As the population ages and more healthcare is expected to occur outside of the hospital setting, we believe that having direct access to the patient in the home is strategically important."
The acquisition is expected to add $70 million to 2016 net sales and to be slightly accretive to adjusted cash EPS for that year. In 2017, it's expected to increase the organic revenue growth rate of Bard and contribute $0.05 to $0.10 to the adjusted cash EPS.
Bard specializes in med tech offerings across vascular, urology, oncology and surgical specialty products. Liberator's distributed products come from a variety of manufacturers, including Bard. They market general medical supplies, primarily urological catheters, ostomy supplies, mastectomy fashions and diabetic supplies. Bard said it will continue to sell other manufacturer's products via Liberator.
"We look forward to adding a strong distribution platform with potential for future growth to our product and technology platforms," added Ring. "We also look forward to continuing to work with the other manufacturers that are part of Liberator's product offering."
- here is the announcement