A Medical Device Daily
VeriChip (Delray Beach, Florida), a provider of radio frequency identification (RFID) systems for healthcare and patient-related needs, reported that it has completed the sale of its wholly owned Canadian subsidiary, Xmark (Ottawa) to Stanley Canada (Oakville, Ontario), a wholly owned subsidiary of The Stanley Works (New Britain, Connecticut) for $47.9 million in cash, which consists of the $45 million purchase price plus a balance sheet adjustment of $2.9 million.
VeriChip said it will use the proceeds of the sale of Xmark to retire all of its outstanding debt. The company said it expects to realize net proceeds, after retiring its outstanding debt, paying transaction related costs, and other contractual commitments, of about $24.8 million.
Under the terms of the stock purchase agreement, $4.5 million of the proceeds will be held in escrow for a period of 12 months. The company intends to fund a special dividend to stockholders currently estimated to be at least $15 million.
Scott Silverman, departing CEO/chairman of VeriChip, said, "We believe the transaction, which provided an excellent valuation for Xmark, was in the best interest of our stockholders. It will enable us to pay off all of our outstanding debt and issue a special cash dividend to our stockholders. Furthermore, the search for potential buyers of our VeriMed Health Link business continues."
As previously reported, Silverman and the company mutually agreed that at the closing of the transaction Silverman would no longer be an officer or director of the company. William Caragol continues as the company's president/CFO. Joseph Grillo, president/CEO of Digital Angel, the company's 48% stockholder, has replaced Silverman as chairman of the company's board.
Medtronic (Minneapolis) reported that it has completed its previously disclosed acquisition of Restore Medical (St. Paul, Minnesota) for $29 million or about $1.60 a share. The deal also includes the payment of Restore's debt (Medical Device Daily, April 24, 2008).
Restore's Pillar palatal implant system will be integrated into the Surgical Technologies (Jacksonville, Florida) business unit at Medtronic. The Pillar system is a minimally invasive, implantable medical device used to treat the soft palate component of sleep breathing disorders, including mild to moderate obstructive sleep apnea (OSA) and snoring.
The Minneapolis/St. Paul Business Journal reported that Medtronic will cut 37 jobs as it closes its acquisition of Restore.
Restore had disclosed shortly before the deal was disclosed in April that it was at risk of running out of cash by mid-year.
A Medtronic spokesman told the Journal that the cuts were made to positions that were redundant, and added that some of Restore's 56 employees had already resigned. It will offer the remainder, which work in the company's corporate infrastructure, severance packages. Medtronic said it plans to keep Restore's sales force intact, and a few of its employees will stay on as consultants in a temporary capacity.
Medtronic's $1.60 per share offer for Restore was a premium to its closing price of 42 cents per share at the time the deal was struck. Medtronic paid a premium for the company, saying Restore's stock had fallen due to cash troubles, not due to problems with the company's products.
In other dealmaking news: Highmark (Pittsburgh) and Independence Blue Cross (IBC; Philadelphia) reported that for the second time the U.S. Department of Justice has cleared the proposed combination of the two companies under federal antitrust law.
Dr. Kenneth R. Melani, president/CEO of Highmark, said, "We are pleased that the Justice Department, following an updated and thorough review, has reaffirmed that the consolidation will not adversely affect actual or potential competition in Pennsylvania."
"Today's decision is an important federal milestone in the regulatory review process," added Joseph Frick, IBC's president/CEO. "Now we look forward to completing the state regulatory review because we believe strongly that the consolidation will allow us to have a significant, tangible and positive impact on access to quality, affordable healthcare in Pennsylvania."
Both companies said they are continuing to provide detailed information to the Pennsylvania Insurance Department for its careful review of the proposed transaction, including participating this month in a series of public informational hearings held by the Department in Pittsburgh, Harrisburg and Philadelphia.
The Department of Justice first reviewed and cleared the proposed transaction in May 2007. Under federal law, a clearance expires after 12 months. Hence, the companies resubmitted their request for federal clearance this past spring.
Highmark's mission is to provide access to affordable, quality healthcare. It serves 4.6 million people through the company's healthcare benefits business.
IBC is a health insurer in southeastern Pennsylvania. IBC and its affiliates provide coverage to nearly 3.4 million people.