Cynosure ($CYNO) will snatch up Palomar Medical Technologies ($PMTI) for $294 million in cash and stock in a deal that brings some intriguing consolidation to the cosmetic laser industry. If all goes according to plan, the deal will close in the 2013 third quarter.
Both companies are based in Massachusetts. Cynosure is based in Westford and launched in 1991. Palomar is in Burlington and has been around for more than 15 years. And the benefits here from a corporate perspective make sense, combining related technologies and enhancing everything from global sales efforts to R&D programs that have greater strength in combination than apart.
An agreement also helps bolster Palomar, the weaker of the two. Palomar booked $80.5 million in revenue during 2012, a big drop from 2011, and lost $6 million. Cynosure, by contrast, generated $153.5 million in revenue during 2012 and $11 million in net income, representing a steady climb over the previous year. Each CEO said that they see the deal as helping to build a larger powerhouse in the industry with compatible stuff to bring to the table.
Cynosure chairman and CEO Michael Davin said in a statement that the agreement "complements our product portfolio and customer base, adding new product and service revenues" and will also establish a broader global distribution network. Also, Palomar adds 40 patents to Cynosure's roster, plus newer laser products and intense pulsed light systems designed to treat the skin. Palomar chairman, president and CEO Joseph Caruso, meanwhile, said he sees the deal as giving shareholders a premium and well help the company expand in new ways.
Here are the details: Palomar shareholders stand to gain $13.65 per share of Palomar common stock, 23% above the company's average closing price since executives released the company's 2012 results in February. Separately, those shareholders also get more than $6.80 per share in cash and over $6.80 per share in Cynosure common stock--$147 million in cash and 5.2 million in overall shares, according to the deal announcement.
Also worth noting, each companies' boards have already signed off on the deal, which should lead to $8 million to $10 million in likely "synergies." Cynosure's Davin will remain chairman and CEO. Palomar's Caruso will become Cynosure's president and vice chairman of the board of directors. Where to locate the combined entity? Palomar wins--plans call for relocating Cynosure's headquarters 15 miles away to Burlington, once the sale is finalized.
Together, both companies have 20,000 aesthetic laser systems installed globally and 48% of their revenue from international markets, according to their deal announcement.
- read the release