C.R. Bard (NYSE:BCR) said it agreed to pay $200 million up front and another possible $80 million for Medafor and its line of anti-bleeding agents.
Minneapolis-based Medafor makes plant-based hemostatic agents including the Arista MPH agent, which won CE Mark approval in the European Union in 2003 and garnered FDA approval for surgical use in 2006.
Bard, based in Murray Hill, N.J., said the deal is aimed at expanding its Davol subsidiary’s reach into the operating suite.
"Medafor has a robust pipeline of potential future products that we expect will expand the use of this clinically proven and effective hemostat to control bleeding," the company said in a press release citing the potential $1.4 billion worldwide market for hemostats.
"With the acquisition of Medafor, we continue to shift the mix of the portfolio to improve the organic growth profile of the business for the longer term. With its safety and ease of use profile, the Arista hemostat provides a great alternative to other commercially available hemostats while providing strong synergy with our Progel Sealant technology and sales channel," Bard chairman & CEO Timothy Ring said in prepared remarks. "This technology platform represents an important building block for our surgical specialty product offering and provides a global footprint for continued expansion."
Bard said it expects the deal to add about 1% to its revenue growth forecast for 2014, and be "a few cents dilutive" to adjusted earnings per share this year and the next, according to the release.
For privately held Medafor, the buyout translates into a $6.37-per-share cash payout at closing, plus about 71¢ per share from an escrow account and up to $2.82 per share in revenue-based milestones, CEO Gary Shope wrote in a letter to shareholders today.
"This transaction, and the premium price we were able to get for your shares, underscores the soundness of our business strategy and how well our employees executed against that plan," Shope wrote. "While Davol might seem like an obvious partner, this was not a decision that came without great consideration. Almost 2 years ago, our board began to explore a number of strategic alternatives for the company to maximize value for shareholders. Since the initiation of that analysis, the company has considered a range of options – including an IPO, partnering with other companies or continuing to operate Medafor as an independent, privately held stand-alone company. As the proxy material will disclose, after considering all of the alternatives, the merger with Davol was clearly the most attractive choice.”