Olympus mounts $370M bid to acquire GI stent maker Taewoong Medical

At the end of 2019, Olympus outlined an updated game plan for its medical device business, directing its focus toward gastrointestinal, urological and respiratory care, complete with increased investment in endoscopy-related devices—and especially in single-use endoscopy tools—to better treat diseases in those areas.

A year later, the devicemaker is still plowing ahead with that plan, as evidenced by its latest acquisition. Olympus is offering up a total of $370 million in cash to purchase Taewoong Medical, according to a Friday announcement.

Taewoong is the South Korea-based maker of a variety of endoscopic devices for gastrointestinal procedures. In the announcement, Olympus singled out its broad slate of metallic GI stents, which are used in minimally invasive procedures to open up a biliary tract, esophagus, colon or duodenum that has been blocked or narrowed due to cancer or another condition in the digestive system.

Taewoong was founded in 1992 and in the three decades since, as CEO Kyong-min Shin noted in the release, has built “a robust market presence in Korea, Japan and Europe, and exports to 86 countries worldwide.” Bringing it under the Olympus umbrella is therefore expected to “immediately enhance” the medtech giant’s “already robust” position in the GI market, added Gabriela Kaynor, global head of Olympus’ therapeutic solutions division.

Under the terms of the acquisition, Olympus will hand $255.5 million to Taewoong in cash as soon as the deal closes—currently slated for June 30. After that, the buyer will mete out up to $114.5 million more if and when Taewoong’s business hits certain milestones.

That price tag represents quite the premium over Taewoong’s yearly earnings. As of the end of 2021, according to Olympus, the Korean devicemaker recorded 6.79 billion Japanese yen ($49.8 million) in annual sales and an operating income of 1.347 billion yen, which comes out to around $9.9 million.

When the acquisition is complete, Taewoong’s portfolio will be housed within Olympus’ therapeutic solutions segment. For the company’s most recent fiscal year, which ended March 31, 2022, the segment reported (PDF) revenues of 275.6 billion yen, or about $2 billion.

All of Olympus’ most recent acquisitions fall into the categories it outlined in the late 2019 plan. In the final days of 2020, the company doled out $340 million to acquire Veran Medical Technologies and its portfolio of computer-guided bronchoscopes and cancer biopsy systems. With its newly bolstered respiratory division, Olympus was able to begin rolling out its first single-use bronchoscopes shortly after the buyout was complete.

Then, in 2021, Olympus scooped up surgical endoscopy company Quest Photonic Devices in a deal worth up to 50 million euros and put down an undisclosed amount to buy Medi-Tate, maker of a stentlike urological device to treat benign prostatic hyperplasia.

Last year, in addition to purchasing endoscopy software maker Odin Vision for up to $79 million, it continued narrowing its focus only to the endoscopic and therapeutic businesses by selling off its scientific solutions business. Bain Capital Private Equity agreed in late August to acquire the unit for 427.6 billion yen ($3.1 billion); its devices are aimed at life science and industrial customers and encompass microscopes, X-ray fluorescence analyzers and other testing equipment.