Medical Device Daily

Urology product company American Medical Systems Holdings (AMS; Minnetonka, Minnesota) said it has agreed to acquireLaserscope (San Jose, California), maker of a surgical treatment of obstructive benign prostatic hyperplasia (BPH), for $31 a share in cash, or about $715 million. The share price represents a premium of 45% over Laserscope's closing share price of $21.41 on Friday.

AMS said it will commence a tender offer to acquire all of the outstanding shares of Laserscope no later than June 14.

Through the acquisition of Laserscope, AMS said it will be committed to providing a range of therapy solutions for BPH patients. While AMS currently offers to urologists its TherMatrx product for the treatment of non-obstructive BPH, the addition of GreenLight to the AMS product line will allow AMS to enter the obstructive BPH segment which requires tissue removal for patient relief.

During a conference call on the Laserscope acquisition, Martin Emerson, president and CEO of AMS, noted that the “primary product” that the company will acquire with this transaction is the Laserscope GreenLight family of products.

“GreenLight is delivered predominantly in an operating room setting where it offers the urologist the important combination of a safe, efficacious and economically appropriate treatment for obstructive BPH. If it hasn't already, we believe that the GreenLight technology has the potential to become the standard of care for the surgical treatment of obstructive BPH,” he said.

Obstructive BPH is a condition treated surgically in more than 1 million men globally each year, the company noted. The use of laser-based technologies for these critical procedures has been rapidly adopted due to physician and patient preference for the improved post-procedure outcomes of laser therapy, it added.

He said the Laserscope buy also gives the company access to some other great urological products, including the StoneLight therapy for treating kidney stones. He added that the company also believes Laserscope's recent buy of InnovaQuartz (Phoenix) (Medical Device Daily, May 2, 2006), which manufactures medical devices for multiple medical procedures, including those used in the treatment of kidney, bladder and other urinary stones, “will allow us to drive both innovation and cost reduction across the entire family of Green Light products.”

According to Emerson, the company does not plan to retain the surgical aesthetics business of Laserscope, as it does not view that portion of the company as a “strategic fit.” As such, he said the company would consider strategic alternatives for the aesthetic business, including divestiture and all financial results from that product line will be accounted for as a discontinued operation.

AMS said it expects the deal to boost its earnings per share beginning in 2008.

CIT Healthcare has underwritten the senior financing for up to $565 million. Piper Jaffray & Co. and other lenders have provided a commitment for additional subordinated financing for the balance of the transaction. AMS said it is exploring permanent financing options and that it expects thee acquisition transaction to close sometime in 3Q06.

In other dealmaking news:

• Mentor (Santa Barbara, California), a supplier of medical products for the global aesthetic medicine market, said it has completed the previously disclosed sale of its Surgical Urology and Clinical and Consumer Healthcare business segments to Coloplast (Humlebaek, Denmark) for $463 million (MDD, March 14, 2006).

As first disclosed in October, Mentor had been evaluating strategic alternatives for its urology business (MDD, Oct. 21, 2005). The divestiture is in line with the company's plan to shift its focus solely to the aesthetic medicine market, it said.

Coloplast said the acquisition brings it additional global resources and capabilities that increase the company's product and service offering for customers and establishes four new franchise areas: women's health, men's health, brachytherapy, and disposable surgical urology products. The combination of the businesses now positions Coloplast as one of the global leaders in urology devices, it said.

“The completion of this acquisition is a significant milestone for Coloplast and was a strategic move for us as we seek to expand our global presence and capabilities and continually expand our product and service offering to customers,” said Jan Frederiksen, president of Coloplast U.S.

Dave Amerson, vice president, urology, will be transferring from Mentor to Coloplast to head up the combined Urology/Continence business.

Coloplast will continue the Mentor brand for a transition period, after which Coloplast will undergo a branding migration process that will help develop a common identity for its products.

Coloplast said it will relocate all U.S. operations in sales, marketing and shared services to Minneapolis-St. Paul, Minnesota, which is due to the large concentration of employees, potential talent for recruitment, and a vibrant medical technology community centered in Minnesota. As part of the acquisition and restructuring effort, the Mentor Santa Barbara and Coloplast Marietta, Georgia, facilities will be closed and operations transferred to Minnesota.

Coloplast said it has offered existing employees the opportunity to relocate, provided severance packages fully in line with market terms for employees who choose not to relocate, and instituted incentives for employees who stay through the facility closing process.

Coloplast anticipates that the reorganization will occur over a period of 12-18 months.

• Vision BioSystems (VB; Melbourne, Australia) has acquired the business and assets of privately held ImmunoVision Technologies (Springdale, Arkansas) in a cash transaction payable by installments over four years.

The present value of the purchase consideration, staggered over four years, is $56 million using a discount rate of 6%. The acquisition will be immediately earnings per share accretive and should positively impact fiscal 2007 earnings for BV by $6 million at the EBITA line growing to over $10 million by 2010. The consideration of $66.6 million is made up of an upfront payment of A$13.3 million plus four annual payments of A$13.3.

BV said the acquisition rounds out its internationally competitive range of pathology laboratory automation instruments and companion reagents.

It will add a number of reagent products to VB's portfolio including the PowerVision polymer based visualization reagent used in immunohistochemistry staining and will bring platform chemistries that complement VB's Novocastra antibody range.

It added that the acquisition will ensure the reliability of supply of a key component of VB's Bond visualization system and is expected to deliver improved combined margins through vertical integration.

Vision BioSystems develops instruments and reagents to clinical histopathology and research laboratories worldwide. Vision's products are used for tissue preparation and staining to assist with the diagnosis of cancer and infectious diseases. It also provides contract manufacturing services to global clients in the broader in vitro diagnostics and life sciences fields.

• Specialized Health Products International (SHPI; Bountiful, Utah) reported the completion of its merger with Med-Design (Ventura, California).

The transaction was approved by stockholders of both companies and was finalized on June 2.

As a result of the merger, Med-Design common stock is no longer being traded and shares of Med-Design common stock were converted into the right to receive 1.25863 shares of SHPI common stock.

According to SHPI, the combination creates a “leading provider of technology for safety medical needles.”

The combined company has three complementary platform technologies, which provide viable safety solutions for virtually all medical needles. The combined company also has four self-manufactured product lines, including three of the leading brands in the safety Huber needle market, and anticipates launching three new manufactured product lines in the second half of 2006.

SHPI said it expects the combined company to be profitable and generate positive cash flow in 2006.

Integration is expected to be substantially complete by the end of the second quarter, and SHPI will close Med-Design's Ventura, California, facility, and the combined company will be headquartered in Bountiful, Utah.

SHPI stockholders have also approved a proposal to change the company's name to Salus Medical and provided authorization to execute up to a 1-for-10 reverse stock split, though the company board said it does not plan on taking these actions concurrent with closing of the merger.

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