A Medical Device Daily

Henry Schein (Melville, New York), the largest provider of healthcare products and services to office-based practitioners in the combined North American and European markets, reported extending its formal offer to acquire all of the outstanding shares of Software of Excellence International (SOE; Auckland, New Zealand) for three weeks to Sept. 7, 2007. Henry Schein is offering to acquire Software of Excellence for NZ$2.70 per share. The offer represents a 26% premium based on the closing price of SOE shares on April 27, the last trading day prior to when Software of Excellence made public the disclosure of a potential acquisition, and is within the valuation range determined by SOE's independent advisor.

If completed, Henry Schein expects the transaction to be neutral to 2007 earnings and slightly accretive to 2008 earnings.

"We are happy that Software of Excellence's independent directors are recommending that its shareholders accept Henry Schein's offer and view this transaction as superior to the expansion plan that Software of Excellence was otherwise planning to pursue," said Stanley Bergman, CEO/chairman of Henry Schein. "We see Software of Excellence as a good fit for Henry Schein and believe that together we can offer a solution to practitioners for improving practice productivity, allowing more time to provide quality care to patients."

To date, Henry Schein has received acceptances equal to about 48% of the voting rights of SOE, including all of the voting rights of the aforementioned shareholders. Henry Schein is extending the offer period to provide adequate time for the remaining SOE shareholders to submit acceptances.

Henry Schein noted that it is not interested in having a portion of Software of Excellence remain publicly traded. If it does not receive sufficient acceptances to ensure that there will be no remaining outstanding shares of Software of Excellence, it is expected to allow the offer to lapse.

Henry Schein's four business groups — dental, medical, international and technology — serve more than 500,000 customers worldwide, including dental practitioners and laboratories, physician practices and animal health clinics, as well as government and other institutions.

RoundTable Healthcare Partners (Lake Forest, California), a private equity firm focused on the healthcare industry, reported that it has acquired a majority interest in Vesta (Milwaukee, Wisconsin), a supplier of silicone medical products to the OEM medical device industry. Financial terms of the transaction were not disclosed.

The Vesta management team, led by CEO Phil Estes, as well as owner-founders Chuck Heide and Glenn Hubbard, will retain a substantial ownership stake in the company and will continue to lead the management of the organization.

As part of the transaction, and to finance further growth opportunities for Vesta, RoundTable facilitated the completion of new senior credit facilities and a private placement of senior subordinated notes. The senior credit facilities were led by GE Commercial Finance Healthcare Financial Services, and included LaSalle Bank and National City Bank.

Vesta's senior subordinated notes were acquired by RoundTable Capital Partners, RoundTable's captive subordinated debt fund. The Capital Fund is a dedicated subordinated debt fund that makes fixed rate subordinated debt investments alongside the equity investments of RoundTable's equity funds.

Vesta is RoundTable's 11th platform investment and the fourth from RoundTable's $500 million Fund II. It represents the third investment from the Capital Fund.

RoundTable's other Fund II platform investments include Aspen Surgical Products (Caledonia, Michigan), Bioniche Pharma (Galway, Ireland), and CorePharma (Middlesex, New Jersey).

In other dealmaking news:

• The Gores Group (Los Angeles, California) said it has finalized its agreement with HealthSouth (Birmingham, Alabama) to buy its diagnostic division, creating Diagnostic Health, an independent diagnostic imaging company.

The deal was originally disclosed in April (Medical Device Daily , April 20, 2007).

The new company is comprised of a network of 53 freestanding diagnostic imaging centers in 19 states and the District of Columbia. While not all services are provided at all sites, 80% of the centers are multi-modality facilities offering a combination of outpatient diagnostic imaging services, including MRI, CT, X-ray, ultrasound, mammography, fluoroscopy, and nuclear medicine services, the company said.

• Water Street Healthcare Partners (Chicago), a private-equity firm focused exclusively on the healthcare industry, said it has completed a two-part investment, in which it has acquired majority ownership in Alpine Biomed (Fountain Valley, California) to support the company's purchase of the neurology diagnostic product line from Medtronic (Minneapolis). The deal creates a global leader in specialty diagnostic devices and marks Water Street's fifth investment in the past year, the firm said.

Water Street's investment in Alpine Biomed to acquire the neurology diagnostic product line from Medtronic follows another recent transaction in which the private-equity firm acquired a business from Stryker (Kalamazoo, Michigan) to form one of the nation's largest outpatient physical therapy services companies (MDD, June 5, 2007).

• Air Methods (Denver) reported that it has entered into an agreement to acquire all of the outstanding common stock of FSS Airholdings (West Mifflin, Pennsylvania), parent company of CJ Systems Aviation Group (Pittsburg, Pennsylvania). CJ provides air medical transport services under both the community-based and hospital-based service delivery models, using a fleet of more than 113 helicopters and fixed-wing aircraft.

The agreement provides for a cash purchase price of $25 million due at closing, subject to customary closing adjustments. Closing is anticipated in October.

• Iomed (Salt Lake City) reported that the per-share consideration for its merger with ReAble Therapeutics (formerly Encore Medical; Austin, Texas) has been established.

The merger was originally disclosed in May (MDD, May 21, 2007).

Iomed shareholders will receive from ReAble Therapeutics cash equal to $2.75 a share in exchange for their IOMED common stock if the merger agreement is approved by Iomed's shareholders and the other closing conditions are satisfied or waived, the company said.

• Health Management Associates (HMA; Naples, Florida) reported that it has completed its transaction to sell two acute care hospitals to Wellmont Health System (Kingsport, Tennessee).

HMA owns and operates general acute care hospitals in non-urban communities located throughout the U.S. and operates 59 hospitals in 15 states with about 8,500 licensed beds.