Deals roundup

Baxter caps off busy year with Synovis buy for $325 million

By ROBERT KIMBALL

Medical Device Daily Staff Writer

Baxter International (Deerfield, Illinois) and Synovis Life Technologies (St. Paul, Minnesota) reported yesterday a definitive agreement for Baxter to acquire Synovis, a provider of biological and mechanical products for soft tissue repair used in a variety of surgical procedures. The acquisition complements and will expand the portfolio of Baxter's regenerative medicine and biosurgery franchise, which includes a number of devices and biological products for hemostasis, tissue sealing and adherence.

The Synovis board has unanimously approved the transaction and is recommending that its shareholders approve the agreement at an offer price of $28 per share, which equates to $325 million of equity value or approximately $260 million after adjusting for the net cash.

Reacting to the news, Synovis's stock jumped more than 50%, closing at $27.78 up 9.34 points.

This has been a busy year for Baxter. In April, the company bought Prism Pharmaceuticals (King of Prussia, Pennsylvania), a specialty pharmaceutical company, for $338 million (Medical Device Daily, April 19, 2011). Last month, the company completed its acquisition of Baxa (Englewood,Colorado) for $380 million (MDD, Nov. 11, 2011). A spokesperson for Baxa told Medical Device Daily that even though this is the third transaction reported by the company this year, it doesn't technically count as a 2011 deal because it won't close until 1Q12.

Synovis makes medical devices used primarily in surgical procedures for soft tissue repair, including Peri-Strips Dry, Tissue-Guard and Veritas Collagen Matrix. These products are used in a variety of surgical procedures, including obesity surgery; patching the lining of the brain, vessels, and cardiac defects; hernia repair, and vascular surgery.

The Synovis portfolio also includes products used in microsurgery such as the Coupler, Flow Coupler and Gem Microclip. These products are used for joining small diameter vessels during autologous tissue breast reconstruction; sealing small blood vessels; and head, neck and hand procedures. Its newest business area is orthopedic and wound management products, with applications ranging from the repair of rotator cuff and other tendon injuries to advanced wound management. These products are primarily used by reconstructive, orthopedic, sports medicine, podiatric, and vascular surgeons.

"Following the close of the acquisition, we expect the full integration of Synovis into Baxter to take approximately 12 months. The integration process will be led by a joint leadership team composed of key personnel from both Baxter and Synovis, and will include a review of operations and facilities. We are not anticipating any immediate changes," Deborah Spak, communications director for Baxter, told MDD.

Annual sales for Synovis were around $70 million in 2010, and Baxter expects the future top-line growth of this business to be accretive to the company's future sales growth.

"This acquisition complements and will expand the portfolio of our regenerative medicine and biosurgery franchise. Baxter's regenerative medicine business saw sales of $527 million in 2010, and through the first nine months of 2011, Baxter's sales of regenerative medicine products have grown 10%. Given Baxter's strong global presence, we see opportunity in particular to grow sales of Synovis' products outside the U.S., since approximately 85% of their current sales are in the U.S.," said Spak.

Baxter makes products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. Synovis Life Technologies makes biological and mechanical products to facilitate the repair and reconstruction of soft tissue damaged or destroyed by disease or injury.

In other dealmaking news, Sagentia has sold its shares in medical device company Sphere Medical (both, Cambridge, UK) for £703,000. Sagentia said that following the disposal, the board anticipated gross cash at the end of the year to exceed £20 million.

The Sphere shares disposal followed an end-of-2010 review of all Sagentia's legacy investments.

As of June 30, Sagentia had just one remaining minority investment to which it attributed any value – Sphere Medical Holdings Limited – with a balance sheet carrying value of £800k.

A Sagentia trading update revealed that the disposal of the Sphere shareholding realized almost £703,000 after transaction costs and the cash balance of the group will increase accordingly. "Following this disposal, the board now anticipate gross cash at the end of the year to exceed £20 million," the update added.

The disposal of the Sphere shareholding will result in a non-cash charge of around £97,000 in the current year. But due to "a modestly stronger than anticipated performance" the board anticipates that profit for the year will be slightly ahead of current expectations, the company said.

No Comments