A Medical Device Daily
Encore Medical (Austin, Texas) reported entering into an agreement to acquire substantially all of the assets of Osteoimplant Technology (OTI; Baltimore), which will include a complete line of spinal implant products featuring a Multi Axial Positioning System for spinal fixation and several total knee and hip implants designs, including a Zweymuller type femoral hip stem.
Encore will acquire the assets with $14.5 million in cash. Up to $1.5 million in milestone payments also could be earned by OTI, based on the performance of the products being acquired during the first 12 months after deal closing.
The merger is subject to standard conditions and the approval of OTI shareholders. Certain officers, directors and principal shareholders with about 42% of the outstanding stock already have entered into agreements to approve the transaction.
Encore projects the acquisition to be break even on an earnings-per-share basis in 2005 and accretive in 2006 and thereafter. Encore will finance the purchase using its revolving line of credit.
OTI owns and markets the spinal products from Advanced Spine, including the VariGrip and VariFix spinal fixation systems, and has developed the MJS Anatomic Knee System. Encore projects between $9 million and $10 million in sales during the first year via the acquired products.
“This represents an important strategic expansion of our surgical implant business,“ said Jack Cahill, president of the Surgical Implant Division of Encore. “We will add a number of new products to our spinal implant offerings, including a spinal fixation system, and move from [being] a distributor of these products for other companies to making and distributing our own line of products.“
He added: “We [also] are acquiring early-stage technology in areas such as spinal disc, interbody cages and kyphoplasty . . . [and are] gaining several hip and knee product designs that will expand our product offerings in this area.“
Encore develops surgical implants, sports medicine equipment and products for orthopedic rehabilitation, pain management and physical therapy.
Biophan Technologies (West Henrietta, New York) reported beginning the integration of Amris (Castrop-Rauxel, Germany) operations and that it will close all related paperwork in “a few weeks.“ An extension of the letter of understanding was signed on Monday. “We extended the letter of understanding to allow us to comply with all related U.S. and German laws,“ said Michael Weiner, CEO of Biophan and Michael Friebe, CEO of Amris, in a joint statement made at the headquarters of Amris, which is being renamed Biophan-Europe.
“While in Germany we met with many customers and prospects of Biophan and Amris to explore integration issues, including meetings with Boston Scientific [Natick, Massachusetts] personnel to explore how Amris will assist Biophan in the support of Boston Scientific. Boston Scientific has a joint development agreement with Biophan across several Boston Scientific divisions, and also has an existing relationship with Amris and MRC,“ said Weiner.
Amris technologies and facilities allow for an expansion of Biophan's capabilities and products, such as MRI devices and components through the Amris facilities and those of its affiliate, Tomovation, also headed by Friebe.
Amris is a developer of MRI systems for enhanced visualization in the MRI environment. Among its technologies are MRI-compatible and active endovascular stents, filters, valves, occluders and catheters.
Biophan develops technologies designed to make biomedical devices safe and compatible with the MRI environment.
In other dealmaking:
• American Retirement (ARC; Nashville, Tennessee), a national provider of senior housing and care, reported completing acquisition of senior living community Galleria Woods (Birmingham, Alabama) from Baptist Health System. Galleria Woods is an entrance-fee continuing care retirement community with a skilled nursing center with 30 private rooms.
The company acquired the community for roughly $5.5 million in cash plus the assumption of entrance-fee refund obligations of about $10.4 million, the majority to be repaid with proceeds generated as new residents enter the communities. The company plans physical improvements at Galleria Woods for about $2 million.
• Beverly Enterprises (BEI; Fort Smith, Arkansas), an operator of nursing homes, said it has rejected a $1.5 billion unsolicited takeover offer from an investor group, saying the bid isn't in its best interests. The investor group — which includes Appaloosa Management, Franklin Mutual Advisors, Formation Capital and Northbrook NBV — launched its $11.50 a share takeover offer last month.
Beverly in January adopted an anti-takeover defense in response and said it would consider the offer. It said it was confident in its growth strategy and expressed concerns about the bidder's ability to finance a deal.
BEI, through its subsidiaries, operates 351 skilled nursing facilities, 18 assisted living centers and 53 hospice and home health centers.