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Merit Medical to pay $167M for GE Healthcare’s Thomas Medical OEM vascular access biz

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Merit Medical Systems

Merit Medical Systems (NSDQ:MMSI) agreed to pony up some $167 million for GE Healthcare‘s (NYSE:GE) Thomas Medical Products business, which makes an OEM maker of catheters used for vascular access.

South Jordan, Utah-based Merit Medical said the deal, expected to close before the end of the year, could boost its sales to $420 million on a pro forma basis, with Malvern, Pa.-based Thomas Medical contributing $37 million.

The merger is also expected to boost Merit Medical’s gross margin by 80 basis points, putting an extra $4.2 million a year in cash into the medical device company’s coffers, according to a regulatory filing. During 2013 and 2014 the acquisition is forecast to add 3¢ to earnings per share; adjusted to exclude 1-time items, EPS are expected to reach 15¢ in 2013 and 13¢ in 2014, according to the filing. Merit also said it expects the deal to enable a tax break worth about $43 million of net present value.

Founded in 1990, Thomas Medical was acquired by GE Healthcare in 2008, according to its website.

Merit said it plans to fund the deal by increasing its credit facility with Wells Fargo Bank to $275 million.

"We believe this transaction will help expand our market presence into new product categories, particularly in interventional cardiology," Merit chairman & CEO Fred Lampropoulo said in prepared remarks. "A majority of cardiac rhythm access procedures utilize products of the nature manufactured by Thomas Medical. We believe substantial international expansion opportunities exist, especially in China, Japan, Russia and the Gulf States, as well as significant new product development opportunities based on know-how and existing intellectual property."

GE Healthcare Systems CEO Tom Gentile said the divestiture "will provide Thomas Medical new capabilities to maximize its opportunities in the single-use vascular access product space and enable GE Healthcare’s cardiovascular segment to remain focused on its core strengths as a provider of total integrated cardiology lab solutions. In addition, we believe Merit Medical will bring a huge amount of expertise in these segments to take Thomas Medical to the next level."

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