The Cooper Companies ($COO) gained almost 6% in early trading after it said it would acquire British contact lens company Sauflon Pharmaceuticals. The Pleasanton, CA-based medical device company used offshore cash, in part, to finance the $1.2 billion deal. The acquisition will give Cooper a bigger European footprint and expand its one-day contact lens offerings, which it noted are the fastest growing segment of the soft contact lens market.
The deal would put Cooper in third place in the one-day contact lens market with roughly 20% market share, behind heavyweights Johnson & Johnson ($JNJ) and Novartis' ($NVS) Alcon unit. In Europe, Cooper would have a market share of 24% to 30%, the company estimated, which would put it in second place behind Alcon.
"This acquisition provides Cooper Vision with a multi-tier, one-day strategy by giving us the widest range of product offerings, including being the premier company with one-day, silicone hydrogel toric and multifocal lenses," Cooper President and CEO Robert Weiss said on a conference call to discuss the deal.
The fastest growing sub-segment within one-day lenses is silicone hydrogel lenses, Weiss added. With the acquisition, the company gains a full suite of silicone hydrogel lenses including spheres, torics and multifocals. The one-day contact lens market grew 10% last year, with one-day silicones up an estimated 25%, Weiss said. One-day silicone hydrogels account for roughly $400 million of the $3.1 billion one-day contact lens market.
Last October, Sauflon received FDA clearance for its Clariti line of one-day and monthly contact lenses. Roughly 40% of its revenues come from Clariti, with another 37% from lens care products.
Sauflon expects $210 million in revenue for its current fiscal year, which ends on Oct. 31. That's an increase of about 22% from the prior period. Of this, $85 million is expected to come from one-day hydrogel sales; that's up 43% year-over-year.
The transaction is expected to close before the end of October. It will be financed with offshore cash and credit facilities. Cooper said the transaction will be accretive to earnings per share in fiscal 2015, excluding one-time charges and deal-related amoritization.
"I've always said that since 95% of the wearer potential is outside the United States, and only 5% is inside the U.S. that we should be able to continue to grow our business very handsomely outside the U.S. for decades to come. This is the perfect example of that opportunity," Weiss concluded.
- here is the press release