Terms call for Frisco, Texas-based Greatbatch to pay $478 million in cash and some 5.1 million shares of stock (which closed yesterday at $49.89 per share, making that portion of the offer worth another $254.4 million). Greatbatch said it also agreed to assume $1 billion worth of Wilmington, Mass.-based Lake Region Medical’s debt.
If consummated as expected during the 4th quarter, the deal would create an OEM juggernaut in the medical device space, about a year after Lake Region merged with Accellent. The buyout would leave Greatbatch stockholders with about 83.4% of the combined company and Lake Region Medical shareholders with the remaining 16.6%, the companies said.
“The combination of Greatbatch and Lake Region Medical brings together 2 highly complementary organizations that can provide a new level of industry leading capabilities and services to OEM customers while building value for shareholders,” Greatbatch president & CEO Thomas Hook said in prepared remarks. “Through this transformative deal, we are going to be at the forefront of innovating technologies and products that help change the face of healthcare, providing our customers with a distinct advantage as they bring complete systems and solutions to market. In turn, our customers will be able to accelerate patient access to life enhancing therapies.”
“I am very proud of the Lake Region Medical team and what they have accomplished over many years,” added Lake Region chairman & CEO Donald Spence. “Today marks the start of an important new chapter for the company and I am confident the combination of Lake Region Medical and Greatbatch will form an even stronger entity with unmatched technology and manufacturing capabilities to better serve our customers into the future.”
“We expect considerable operating synergies resulting in sustained profitable growth, as well as double-digit adjusted cash EPS growth,” Greatbatch CFO Michael Dinkins said.
The companies posted combined revenues of about $1.5 billion last year. Greatbatch said it expects the deal to add to its earnings per share at a double-digit clip next year, with net synergies worth $25 million of operating profits. That figure is expected to rise to $60 million in 2018, the company said.