Teleflex today announced it has entered into a definitive agreement to acquire Standard Bariatrics and its powered stapling technology for bariatric surgery.
Teleflex will acquire the Cincinnati, Ohio-based company for an upfront cash payment of $170 million at closing with additional consideration of up to $130 million that will be payable upon the achievement of certain commercial milestones. The deal is expected to close early in the fourth quarter of 2022.
Standard Bariatrics’ Titan SGS is a surgical stapler for an anatomy-based approach to sleeve gastrectomy. The company designed the anatomy-based approach of surgical stapling to help surgeons achieve more consistent and symmetrical gastric sleeve pouch anatomy in sleeve gastrectomy procedures. It has a 23 cm continuous staple line to allow surgeons to plan and place staples in one firing.
Titan SGS was also recently named as one of the most innovative medical devices of 2022 by the Galien Foundation’s Prix Galien USA awards.
“Teleflex’s strategy is to invest in innovative products and technologies that can meaningfully enhance clinical efficacy, patient safety and comfort, reduce complications, and lower the overall cost of care,” Teleflex President and CEO Liam Kelly said in a news release. “The acquisition of Standard Bariatrics adds an exciting and differentiated product serving the large and growing sleeve gastrectomy market, which we estimate to be approximately 120,000 procedures annually in the U.S. In addition, the deal enables Teleflex to leverage our strength in our existing bariatric surgeon call point, with a differentiated product that complements many of our key surgical products, including our ligation portfolio, MiniLap Percutaneous Surgical System and Weck EFx fascial closure portfolio.”
Teleflex plans to finance the acquisition at closing through borrowings under its revolving credit facility. The transaction is not expected to contribute meaningfully to the company’s revenue and is expected to be approximately 10¢ dilutive to adjusted earnings per share.
Truist Securities analysts Richard Newitter and Samuel Brodovsky said the deal is a “step in the right direction” to grow Teleflex’s revenue 6% to 7% for the year, as its Urolift franchise experiences slowing growth.
“We are excited to enter into this transaction, which we expect to be immediately accretive to Teleflex’s revenue growth and also enhance our gross margin profile over time. We also expect that the acquisition will exceed our cost of capital by the end of the fourth year following the completion of the acquisition,” Kelly said.