A Medical Device Daily

Inverness Medical Innovations (IMI; Waltham, Massachusetts) is on the M&A trail again.

After already making a string of acquisitions in the diagnostics space this year, it yesterday said it will acquire HemoSense (San Jose, California) in an all stock deal for $165 million.

Inverness said each holder of a share of HemoSense common stock will receive 0.274192 shares of Inverness common stock, which closed on Monday at $46.46 a share. This represents a 37.5% premium, based on the average trading prices of both companies over the last five trading days. The deal is subject to HemoSense shareholder approval as well as the satisfaction of regulatory and other customary conditions, and is currently expected to close in the fourth quarter.

In May, IMI beat out rival Beckman Coulter (Fullerton, California) for the right to acquire Biosite (San Diego) for $92.50 a share (Medical Device Daily , May 11, 2007). And last month it unveiled plans to acquire Cholestech (Hayward, California) for $326.3 million (MDD, June 5, 2007). In February, IMI acquired the assets of First Check Diagnostics (Lake Forest, California) for $25 million (MDD, Feb. 6, 2007).

The purchase of Hemosense is structured as a tax-free reorganization, and is expected to be slightly accretive in 2008 and accretive thereafter. The deal is subject to HemoSense shareholder approval as well as the satisfaction of regulatory and other customary conditions, and is currently expected to close in 4Q07. In connection with the merger, certain HemoSense stockholders have entered into voting agreements with Inverness under which they have agreed to vote 33% of the outstanding shares of common stock of HemoSense in favor of the transaction at the meeting of HemoSense stockholders.

IMI is a supplier of consumer pregnancy and fertility/ovulation tests and rapid point-of-care diagnostics.

Hemosense develops handheld blood coagulation monitoring systems.

Nearly eight months after IsoTis (Irvine California) filed its registration statement with the Securities and Exchange Commission for a public offering of common stock (MDD, Jan. 31, 2007), the orthobiologics company is set to merge with Integra LifeSciences Holdings (Plainsboro, New Jersey).

The two companies reported the deal yesterday and under the terms of the merger, IsoTis shareholders will receive $7.25 in cash for each share of IsoTis common stock they own, for a deal value of about $51 million, plus debt to be repaid at closing.

Upon closing, expected to be completed in 4Q07, IsoTis will become a wholly owned subsidiary of Integra.

Integra said the merger will make it one of the largest companies in the world focused on advanced technology in orthobiologics. Its product offerings will include brands, such as Integra Dermal Regeneration Template, DuraGen Dural Graft Matrix, Integra Mozaik Osteoconductive Scaffold, NeuraGen Nerve Guide and the Accell family of demineralized bone matrix products, DynaGraft II and OrthoBlast II.

The combined company will have operations in North America and Europe with more than 2,000 employees, including around 300 sales and service professionals and more than 500 employees in Europe.

“This combination brings together two well-respected industry leaders in the regenerative medicine marketplace,” said Stuart Essig, CEO of Integra. “Both Integra and IsoTis provide some of the most advanced technology addressing surgeons’ needs. By combining our companies’ complementary, best-in-class products and technologies, we expect to drive enhanced revenue growth and value creation. Integra has a track record of successfully executing on and integrating strategic transactions and we expect to realize the benefits of this combination in both our top line growth and earnings per share over the long term.”

The enlarged company said it will benefit from a broader global platform with direct selling organizations in North America and Europe. Currently about 25% of Integra’s and IsoTis’ combined revenues are generated internationally. The companies expect to increase growth in international revenues by leveraging increased scope and scale, including an international direct sales and service team of more than 75 associates and 200 distribution partners selling in more than 100 countries.

For nearly two years Integra has been expanding its presence in the orthobiologics market in Europe. The company in 2005 acquired the Newdeal (Lyon, France) group of companies, makers of specialty implants and instruments for foot and ankle surgery, for 139.5 million (about $53 million) in cash (MDD, Jan. 6, 2005 ).

As perhaps a bit of foreshadowing of an impending merger, IsoTis had been scaling back on some of its endeavors. Most recently, the company reported its intention to wind down its European operations.

IsoTis said it expected to achieve pre-tax savings of about $3 million to $5 million a year from these actions. After elimination of its European entities and facilities, IsoTis had said it would maintain research and manufacturing operations at a single site in Irvine.

Covington & Associates acted as financial advisor and Foley Hoag acted as legal counsel to Inverness. Lazard Freres & Co. acted as financial advisor and Wilson Sonsini Goodrich & Rosati acted as legal counsel to HemoSense.

In other dealmaking news:

• ScottCare (Cleveland, Ohio), a company that specializes in non-invasive external counterpulsation (ECP) therapy and cardiopulmonary rehabilitation telemetry, reported that the company has signed a definitive agreement to acquire the operations of Rozinn Electronics, (Glendale, New York) , a privately-held business dealing in cardiovascular diagnostic equipment.

ScottCare said it will accelerate worldwide development, marketing and support for Rozinn’s diagnostic product suite. including Holter for Windows Pacemaker and Event Monitoring Products. In addition, ScottCare will expand the availability of its leading cardiac rehab telemetry and ECP therapy products outside North America through Rozinn’s international network of dealers.

• Emeritus (Seattle), a national provider of assisted living and related services to senior citizens, reported that it has completed the $24.5 million acquisition of three Florida communities formerly leased by the company. The areas are comprised of 431 units and offer assisted living, memory loss, and independent services to seniors.

The acquisition was partially financed through mortgage debt of $19.6 million at an initial interest rate of 6.83% for a term of five years, resulting in annual cash flow savings of about $1.2 million, based on this initial rate. Emeritus operates, or has an interest in, 205 communities in 34 states

Emeritus provides assisted living for Alzheimer’s and related dementia patients.