Healthcare giant Steris (NYSE:STE) is looking to "significantly expand" its presence in the gastrointestinal devices market with the $270 million acquisition of U.S. Endoscopy Group, the company announced this week.
U.S. Endoscopy, which employs about 400 and generated about $70 million in revenue in 2011, designs, manufactures and sells devices and support accessories used in gastrointestinal and urology procedures.
"The addition of U.S. Endoscopy to our current portfolio is a natural extension of our presence in the GI market," Steris president & CEO Walt Rosebrough said in prepared remarks. "They have generated double-digit organic growth for many years through successful new product development, and the acquisition provides Steris immediate scale with a direct sales force in the U. S. and a strong brand name."
U.S. Endoscopy is Steris’ next-door neighbor in Mentor, Ohio. The companies even share a driveway, Cleveland.com reported.
"We are absolutely delighted to have the opportunity to become part of Steris, a company we respect and know well," U.S. Endoscopy co-chairman & CEO Gulam Khan said in a press statement. "Not only will we gain the size and scale necessary to continue to innovate and grow over the long term, we will also ensure that we can and will remain a vital part of the Greater Cleveland community."
Keeping local jobs intact was one of the driving factors in the merger, in which Steris beat out other suitors to seal the all-cash deal. Steris is also buying certain U.S. Endoscopy land and buildings for an additional $7 million, according to an SEC filing.
Steris plans to pay for the merger with cash on hand and borrowings under an existing credit facility, and the company is not assuming any debt in conjunction with the deal.
Steris plans to add U.S. Endoscopy to its $1.4 billion healthcare business segment and expects the deal to close by the end of Q2 2013.
STE shares were down 0.4% to $31.55 as of about 3 p.m. today.