Bayer AG will snatch up California birth control device maker Conceptus ($CPTS) for $1.1 billion, a move that helps the German maker of drugs and chemicals add to its women's health products. Investors reacted strongly, driving the Conceptus' stock up more than 19% to nearly $31, in late morning trading on April 29.
That's almost at the targeted price of the negotiated deal. Bloomberg, Fox Business and others reported that Conceptus shareholders are expected to get $31 per share in an all-cash deal, 20% higher than the April 26 closing price of $25.90. News of the agreement also comes as Conceptus reports stellar 2013 first quarter earnings. The Mountain View company said April 29 that it booked $34.1 million in revenues during the quarter, a $17.5% bump over the same period last year. And the company's net income of just over $2 million represents a nice turnaround from a $2.8 million loss in the 2012 first quarter.
What Bayer gets is a new source of steady and growing income: Conceptus' Essure device, which has been used by more than 750,000 women globally. It first won FDA approval in 2002 and is covered in the U.S. by a majority of public and private insurance plans, the company claims. Bayer, as Bloomberg notes, has dealt with declining sales from two of its birth control pills as generic copies have cut into that business, so a birth control medical device whose revenue is on the upswing will help cushion the negative impact of declining drug sales in the space.
Essure is considered a form of permanent birth control. Implanted in the doctor's office in a procedure that lasts about 10 minutes, it consists of two flexible and metal fiber coil insets placed in a woman's fallopian tubes through the cervix. As Conceptus explains, the body, over 90 days, subsequently forms a natural barrier in the fallopian tubes. A follow-up test confirms that the inserts are where they are supposed to be and that the fallopian tubes are blocked.
Conceptus launched in 1992 and employs 286 people, Fox Business and Bloomberg noted.