A Medical Device Daily
Matria Healthcare (Marietta, Georgia) reported signing an agreement to sell Facet Technologies (also Mari-etta), a subsidiary specializing in diabetes product development and assembly, to a new company formed by Water Street Capital Partners (Chicago), a private equity firm specializing in healthcare. The all-cash transaction is valued at $122 million.
The boards of both companies have approved the deal, which is expected to be completed on or about Aug. 31, assuming completion of customary conditions, including federal antitrust review.
Parker Petit, CEO and chairman of Matria, said, “we believe Water Street is the right partner for Facet. Water Street's healthcare expertise, operating focus and growth strategies for Facet will serve Facet's customers extremely well . . .”
Timothy Dugan, managing partner of Water Street Capital, said, “Matria has done an outstanding job building Facet into the market leader.”
On Jan. 6, Matria disclosed its intention to divest two of its businesses, Facet Technologies and Dia Real, the company's international diabetes services operation in Ger-many.
“We are extremely pleased with the performance of both operations since we announced our intentions,” said Petit. “Both Facet and Dia Real have performed well and have continued to generate very positive cash flow for the company. We are making excellent progress in the divestiture of Dia Real.”
He said that when the two purchases are completed, and with cash from continuing operations, “we expect to reduce our debt by approximately $175 million by year-end.”
Matria provides health enhancement programs to health plans, employers and government agencies, managing chronic diseases and episodic conditions; delivers programs addressing wellness, healthy living, productivity improvement and patient advocacy; and provides case management of acute and catastrophic conditions.
Adams Respiratory Therapeutics (Chester, New Jersey) has entered into an agreement with Cardinal Health (Dublin, Ohio) to repurchase a 130,000-square-foot manufacturing facility in Fort Worth, Texas, for about $28 million.
Adams originally sold the facility to Cardinal in 2004.
Adams will make cash payments of about $28 million, of which about $24 million will be paid upon closing on or about July 31, the remainder to be paid quarterly during FY07. The re-acquisition payments will include purchases of manufacturing assets, raw material, work-in-process inventory and non-recurring expenses.
Adams said it expects to take a one-time, pre-tax charge of between $8 million and $10 million in the fiscal 1Q07 ending Sept. 30, depending on the final value of the assets and obligations of the transaction. It said it plans to finance the buyback using a combination of cash on hand as well as debt financing.
Michael Valentino, president/CEO of Adams, said, “Looking back, the original decision to sell the Fort Worth facility to Cardinal Health in April 2004 was absolutely the right decision for our company at the time. With $14 million in annual net sales, we needed to focus our efforts on maximizing the commercial potential of our then newly approved product, Mucinex. As a result of this sharp focus, we now consider sales, marketing and advertising core competencies of Adams and the Mucinex brand has become a category leader. Two years later, with several products on the market and trailing-12-month net sales of more than $225 million as of March 31, our business priorities have evolved.”
The facility is the primary manufacturing and product packaging facility for the company's Mucinex and Humibid franchise of guaifenesin-based, extended-release bi-layer tablet products.
Adams and Cardinal also entered into separate manufacturing supply agreements for granulation capacity at Cardinal Health's Winchester, Kentucky, facility and packaging capacity at two other Cardinal facilities. These facilities have been validated and are operational with respect to the Mucinex and Humibid products.