Private equity firm Apax Partners is continuing to keep the medical aesthetics market space hot with its proposed acquisition of Syneron Medical Ltd., also known as Syneron Candela, for $397 million. The acquisition price represents a 15 percent premium to the Yokne'am Illit, Israel-based company's 90-day average closing price through Feb. 10. News of the deal caused Syneron's shares (NASDAQ:ELOS) to rise as high as 6.9 percent during Monday trade. Shares closed at $11.10 up about 5.2 percent.
The Syneron board unanimously approved the transaction. Shimon Eckhouse, who owns 7.4 percent of the company, has entered into a customary voting agreement pursuant to which he has agreed to vote all of his shares in favor of the transaction.
Founded in 2000, Syneron develops products for body contouring, hair and tattoo removal as well as facial treatments. The company brought in about $298 million in revenue in 2016 and had a net profit of $12 million, according to the firm's latest earnings report.
Syneron recently received CE mark for its Co2re Intima, an in-office laser procedure for the treatment of vaginal atrophy and rejuvenation. The device has already launched in the U.S. During its latest earnings call, company executives said Co2re Intima had a solid 2016 fourth quarter for U.S. sales, despite having a limited number of specialized reps.
Amit Meridor, Syneron's CEO said Co2re Intima has broad range of labeling and indications in gynecology.
"The company is positioned for improved performance in 2017, and we believe that we are well positioned for growth in 2017," said Meridor. "We have a broad portfolio addressing this market, including our emerging products in some of the fastest growing segments such as body shaping and women's intimate health."
Apax partners said the company provides an attractive entry into the medical aesthetics market.
Steven Dyson, partner and co-head of Healthcare at Apax Partners said, "We have identified the medical aesthetics market as a highly attractive investment area given its long-term growth prospects. Syneron is very well positioned to capture this opportunity, with its highly diversified geographic footprint, broad and market-leading products portfolio, exceptional R&D capabilities and cutting-edge technology."
OTHER POSSIBLE SUITORS?
The deal has a provision that includes a "go-shop" period which ends May 9. During this time, Syneron will actively solicit, evaluate and potentially enter into negotiations with respect to alternative proposals from third parties.
The "go-shop" period could result in a potentially higher share price if another suitor is interested, said Richard Newitter, an analyst with Leerink Partners LLC.
Other companies that could be interested in the aesthetic device space include Galderma SA, Merz Pharma GmbH and Fosun International Ltd., Newitter said.
He noted that a higher bid could be possible, but noted that Syneron probably would not be able to retrieve a multiple close to what other aesthetic assets have gone for as those deals have stretched into the billions.
"Stripping away the M&A angle, we continue to believe Syneron was/is on its 'ninth life' as a show-me story," Newitter said. "This, especially considering that Syneron will now be facing tougher competition in its core markets following the recent wave of industry consolidation creating more formidable competitors with which to contend."
Apax's proposed acquisition of Syneron marks the third this year in the aesthetics device space.
In February, Dublin-based Allergan plc revealed its plan to acquire body contouring specialist Zeltiq Aesthetics Inc. for $2.48 billion. (See Medical Device Daily, Feb. 14, 2017.)
Pleasanton, Calif.-based Zeltiq was founded in 2005 and first gained FDA approval for its Coolsculpting system in 2010. (See Medical Device Daily, Nov. 9, 2010.)
A few days removed from Allergan's proposed Zeltiq buy, Hologic Inc. revealed its plan to pick up Westford, Mass.-based Cynosure Inc. for $1.65 billion. (See Medical Device Daily, Feb. 15, 2017.)
Cynosure competes in this market with Sculpsure, a laser treatment for noninvasive body contouring, which gained FDA clearance in 2015. (See Medical Device Daily, May 20, 2015.)
The company also markets Monalisa Touch, a Co2 laser for women's health.
For a while, analysts have said the aesthetics market is ripe for mergers and consolidation, particularly given recently emerging high growth markets that have drawn increased attention to the space, including noninvasive fat removal and women's health.
The aesthetics space has also become appealing because most devices are not supported by insurers and operate in the cash-pay arena.
Suraj Kalia, an analyst with North Capital Markets said, "We still strongly believe that larger strategics would look to 'hedge' their profit and loss with cash-pay technologies."