Syneron Medical Ltd. agreed to snap up one of its main rivals, Candela Corp., for $65 million, setting the stage for the creation of a cosmetic device-making juggernaut to compete with another local player, Palomar Medical Technologies, by the end of this year.
The companies said the deal will see Wayland, Mass.-based Candela become a subsidiary of the Israeli firm, maintaining both its brand and its Bay State operations. Company executives told analysts on a conference call they haven’t decided who will lead the Wayland unit.
The terms of the deal call for Candela shareholders to receive 0.2911 Syneron shares for each share of Candela, or $2.84 per share, a 51 percent premium. The deal also has a “no-shop” covenant prohibiting Candela from seeking other suitors and a $2.6 million kill fee the Wayland company would owe the Israeli firm if the deal founders, according to a regulatory filing.
Syneron CEO Louis Scafuri, who will become chief of the new combination, said the plan is to maintain both companies’ brands.
“It is integral and a cornerstone of this transaction that we are going to maintain both brands,” Scafuri told analysts.
Shimon Eckhouse will stay as Syneron’s board chairman and Candela president and CEO Gerard Puorro will join the board. Executives from each organization will join the management team.
The deal sets the stage for the continuation of Palomar’s prolonged legal battle against both companies. The Burlington, Mass.-based firm sued Candela and Syneron in the U.S. District Court for Massachusetts, alleging infringement of a pair of hair-removal technology patents.
The U.S. Patent and Trademark Office handed Palomar a pair of wins earlier this year, affirming the validity of both patents and multiple new claims within them.
And the European Patent Office upheld the patents in May as “novel and inventive” over its competitors’ intellectual property.
Even so, Syneron execs sounded a defiant note during the conference call, saying the don’t believe their or Candela’s products infringe any patents and downplaying any potential liability.