Integra LifeSciences (NSDQ:IART) said today that it’s floating a $1.05 billion cash offer for Johnson & Johnson (NYSE:JNJ) unit Codman Neurosurgery.
Plainsboro, N.J.-based Integra said it plans to finance the buyout with cash on hand, a credit revolver and a new term loan; BofA Merrill Lynch and JPMorgan are backing the deal, the company said. Codman Neuro put up sales of about $370 million last year, but Integra said it expects “some initial disruption” in the 1st year after closing, with growth established at 3% to 6% over the long term. The new business is forecast to add 22¢ to adjusted earnings per share in the 1st year, Integra said, noting its aim to get its overall sales to the $2 billion mark.
“This proposed transformational acquisition of Codman Neurosurgery creates compelling value for our shareholders, employees and patients,” president & CEO Peter Arduini said in prepared remarks. “Its innovative portfolio and global reach will enable us to enhance our position in the neurosurgery market, while also building a global infrastructure that will benefit Integra as a whole. We look forward to welcoming the more than 600 Codman Neurosurgery employees to the Integra team.”
The deal excludes Codman’s neurovascular and drug-delivery businesses, J&J said.
If the proposed deal is not closed, the New Brunswick, N.J.-based healthcare titan is entitled to receive a termination fee of $60 million, according to a regulatory filing.
The acquisition is expected to close in about 24 principal international jurisdictions during the 4th quarter and in the remaining nations “on a rolling basis after that, Integra said. BofA Merrill Lynch acted as financial advisor with Latham & Watkins as legal advisor, the company said.
IART shares closed up 1.0% at $43.28 apiece yesterday, when JNJ shares finished up 0.4% at $116.36 each before sliding -0.3% to $116 even.
Material from Reuters was used in this report.
