A Medical Device Daily
Rochester Medical (Stewartville, Minnesota) reported reaching agreements in principle with Coloplast (Humlebaek, Denmark) and with Mentor (Santa Barbara, California) in connection with Mentor's proposed sale of its urology product line to Coloplast, as reported last week (Medical Device Daily, March 29, 2006).
Coloplast is buying Mentor's Surgical Urology and Clinical and Consumer Healthcare business segments for $463 million.
Rochester said it will acquire cossets of the companies related to sales of male external catheters (MECs) in the UK, including the right to sell in the UK Clear Advantage, Freedom, Freedom Plus, and Transfix brands of MECs. They also include Mentor's UK Dispensing Appliance Contractor License and its sales offices and warehouse in Lancing, England.
With the acquisition, the facility will house Rochester Medical UK, a new subsidiary which will market the MECs as well as all of Rochester's product lines of MECs, Intermittent Catheters and Foley Catheters. Coloplast will continue to market its own male external catheter products in the UK under the Conveen brand.
In the agreement, Rochester will buy these assets for $16 million, $10 million payable at close and $6 million payable in installments over three years.
Additionally, Coloplast and Rochester said they will enter into an agreement in which Rochester will supply silicone MECs to Coloplast to be sold under Coloplast's brands worldwide, except in the UK. Coloplast will supply Rochester with its requirement of latex MECs which Rochester will sell in the UK under its newly acquired Freedom and Freedom Plus brands.
Rochester also will acquire the business assets of Mentor's Anoka, Minnesota, silicone male external catheter manufacturing facility for “an amount less than $2 million,“ and will lease the 20,000-square-foot facility from Mentor. In addition, Mentor will convey or re-convey to Rochester all intellectual property related to the manufacture and sale of silicone MECs at the Anoka facility.
With completion of these transactions, all existing arbitration between Mentor and Rochester will be dismissed, the companies said.
Closing of these transactions will coincide with Mentor's acceptance of Coloplast's offer to buy Mentor's Urology Business.
Anthony Conway, CEO of Rochester, said that with these deals, Rochester “will sell significant volumes of [MECs] and will begin building branded sales for our entire product line, including MECs, intermittent catheters and Foley catheters.“ He predicted the added product sales will produce an added $8 million annually, plus improvements in gross product margins.
Carsten Lonfeldt, group director of Coloplast, said, “I am optimistic that we will reach a final agreement which adds value for all three parties, and satisfied that Coloplast will continue to market its own [MEC] products in the UK, which include the Conveen range, incorporating the newly launched non-latex Optima product.“
In other dealmaking:
• MMS (St. Louis), an independent healthcare distributor, reported completing its acquisition of the Extended Care and Caligor Hospital Divisions (Pelham Manor, New York) of Henry Schein (Melville, New York). The sale, reported in early March, closed April 1 with financing through Merrill Lynch Capital. Terms of the deal were not disclosed.
MMS predicted that the business generated from the acquisition is expected to more than double its sales to around $340 million annually and gives it a major East Coast presence.
“The Extended Care and Caligor Hospital Divisions are well established in their markets. Adding their capabilities and services is expected to further enhance MMS's growing market position in the medical supply industry,“ said Tom Harris, MMS executive vice president.
The two new divisions will operate under the continued leadership of Gina Marchese, vice president, general manager of MMS Caligor.
MMS, formerly Midwest Medical Supply, is made up of divisions dedicated to nursing homes, hospitals, physician practices, government facilities, specialty products, home care, pharmaceuticals industrial business and redistribution.
The Caligor Hospital Division and Extended Care Division service three channels of healthcare providers: hospitals, nursing homes and home care dealers. The company is supported by a 200,000-square-foot distribution center in Secaucus, New Jersey.