A Medical Device Daily
American Capital Strategies (ACS; Bethesda, Maryland) reported that it has invested $50 million in the buyout of Stamping Specialties, which does business as Electro-Component Assembly (ECA; Newbury Park, California), a firm specializing in making disposable torque wrenches, hexagon keys and solid wrenches used in the installation of pacemakers, defibrillators and other implantable medical devices.
American Capital’s investment takes the form of senior term loans, senior subordinated debt and common equity. It also is providing a revolving credit facility. ECA founders will retain a seller note as part of the transaction. Post-close, American Capital holds a controlling stake in ECA.
“With this investment, we are supporting a manufacturer of a critical medical device component with consistent demand for the foreseeable future,” said Ira Wagner, American Capital chief operating officer. “Our investment in ECA demonstrates our ability to locate excellent niche manufacturers, conduct quick and thorough due diligence and fund the entire capital structure of an investment.”
“As the primary supplier of wrenches to all of its customers, ECA is estimated to have a leading worldwide market share,” said ACS principal Aseem Giri. “In addition to its leading position and excellent reputation, we found ECA an attractive investment opportunity because of its strong financial performance, recession resistant business and non-discretionary replacement demand for its disposable products.”
ECA distributes its products to pacemaker and defibrillator OEMs who then package the appropriate wrench or key with their implantable cardiac devices. ECA sells its products to the world’s largest manufacturers of implantable cardiac devices, including Medtronic (Minneapolis), Guidant (Indianapolis) and St. Jude Medical (St. Paul, Minnesota).
American Capital said it has invested more than $2.2 billion in the last 12 months, nearly $460 million year to date and nearly $60 million quarter todate.
Banta (Menasha, Wisconsin) reported that it has completed the previously disclosed sale of substantially all assets of its single-use healthcare products subsidiary, Banta Healthcare Group, to Fidelity Capital Investors, the private equity division of Fidelity Investments (Boston).
The purchase price of the transaction, first disclosed in February (Medical Device Daily, Feb. 15, 2005), was $67 million in cash, subject to final net working capital adjustments.
In a separate, previously disclosed transaction related to the divestiture of the Banta Healthcare Group, Banta sold its warehouse in Rialto, California, to a California real estate investment company for $7 million.
With the sale of the assets of Banta Healthcare, Fidelity Capital Investors will rename the business Tidi Products. The new business will manufacture single-use products for the healthcare and dental markets. Products are primarily paper- and film-based, and include patient exam gowns, examination table paper, dental bibs, gauze sponges and thermometer sheaths.
“We look forward to partnering with the existing management team to further Tidi Product’s growth,” said David Wilson, managing director of Fidelity Capital Investors. “Moving forward, the company will leverage its strong market position and existing customer relationships to achieve additional growth both through new product introductions and extensions as well as through entry into new geographic markets.”
Fidelity said Kevin McNamara would continue to serve as the president of the acquired business.
Banta Chairman, President and CEO Stephanie Streeter said the decision to sell Banta Healthcare reflects the priorities of the company’s strategic plan, which emphasizes growth and development of its two primary businesses, printing services and supply-chain management services.
Streeter said that although Banta has never had operational or market synergies with Banta’s other divisions, it has been a well-run contributor to the company’s earnings and cash flow. “Under new ownership eager to support the business by actively pursuing and investing in growth opportunities, Banta Healthcare has a bright future,” she said.
In other dealmaking news:
• Medical Makeover Corp. of America (MMAM; West Palm Beach, Florida) reported acquiring Aventura Laser and Skin Care (Aventura, Florida), a laser hair reduction, aesthetic improvement and skin care business.
MMAM has acquired 100% of the stock of Aventura Laser, including a client base of more than 400 who regularly receive a combination of the services offered by the company. MMAM said it plans to reduce operating costs through consolidation into the 7,000 square foot Aventura location.
“The acquisition of Aventura Laser, which was built on the highly profitable laser business, is an important strategic milestone for us because it expands MMAM’s ability to offer superior, medical grade appearance improvement services to clients in our initial target market in Aventura,” said Randy Baker, president and CEO of MMAM. “Completing this transaction positions the company to achieve its second quarter 2005 operational and financial targets.”
MMAM provides medical grade “makeover” treatments in under an hour with a consumer-directed focus using non-invasive technologies. Each center specializes in a variety of cosmetic procedures including treatments for wrinkles, enlarged pores, skin discoloration, unsightly blood vessels, sagging skin, unwanted hair, scars, cellulite and acne.
• Pegasus Pharmaceuticals (Palm Beach Gardens, Florida) has acquired 51% of Heartview (Cleveland), a company developing a portable heart-screening device which provides physicians with a method for earlier detection of heart disease.
The Cardiovisor 6C System conducts an ECG data analysis and builds and displays a color-coded topological portrait of heart electrical activity providing principally new information about the heart state after only 60 seconds. Pegasus said this device has tremendous potential in cutting costs associated with ischemic heart disease and for screening populations.
The Cardiovisor 6C heart screening system is currently undergoing clinical trials at a hospital in New York.
• PHNS (Dallas) reported the acquisition of Hunter Medical Systems (HMSI; Saint Rose, Louisiana), a medical file records management and release of information (ROI) company. The acquired HMSI’s business includes 314 hospital and clinic clients in 14 states, as well as a 20,000-square-foot facility. HMSI will operate as a PHNS subsidiary, initially under the name Hunter Medical Systems, a PHNS company, and will employ all HMSI personnel.
Chick Young, CEO of PHNS, said, “This acquisition is vital because it improves PHNS’ ability to service our customers and will enhance our delivery of a full continuum of services to healthcare providers.” Fred Hunter, former operations manager for HMSI, will be the president of Hunter Medical Systems, a PHNS company.
A majority of PHNS’ customers use third parties to provide medical record ROI services and medical file record storage. With the acquisition of Hunter Medical, PHNS said it can offer its customers the expertise and infrastructure to compete effectively in the ROI and off-site record storage services industry.
PHNS says it is the only privately owned company that provides a suite of healthcare solutions including information technology, health information management and receivables management services tailored to hospital and multi-facility healthcare systems.