The cash-and-stock deal is slated to leave privately owned Welch Allyn’s shareholders owning a 13% stake in Hill-Rom. The deal, expected to close by the end of September, calls for Chicago-based Hill-Rom to pay $1.625 billion and 8.1 million HRC shares for Welch Allyn, which is based in Skaneateles Falls, N.Y.
Today Hill-Rom said the Federal Trade Commission granted early termination of the required waiting period on the deal.
“As 1 company, we will have the infrastructure, capabilities and innovative product portfolio to faster pursue a differentiated business model that meets the evolving needs of patients and customers and delivers superior healthcare outcomes across multiple care settings. We believe this combination, which will be accretive to Hill-Rom’s adjusted gross and EBITDA margins, will also result in an enhanced financial profile, creating the opportunity for accelerated growth,” Hill-Rom president & CEO John Greisch said when the deal was announced last month. “Welch Allyn is a well-respected company with a powerful brand, a broad suite of products and an outstanding team of employees. We are committed to building on Welch Allyn’s legacy, and intend to maintain a major presence in Skaneateles Falls, the home to a large base of Welch Allyn’s talent, expertise and resources. We will also preserve the highly respected Welch Allyn name. We look forward to welcoming the Welch Allyn team to Hill-Rom and combining our two great companies to continue our shared mission of improving patient outcomes and reducing patient costs.”
Hill-Rom said Greisch will stay on in the corner office for the combined entity, with “certain members” of Welch Allyn’s management staying aboard. Although the new Hill-Rom will still be based in the Windy City, the company said it expects to keep a “substantial” presence in Skaneateles Falls and Welch Allyn’s footprint in Tijuana. The new company is expected to bring in $2.6 billion in annual sales and throw off earnings of more than $500 million before interest, taxes, debt & amortization.
Hill-Rom, which put up sales of $1.69 billion last year, affirmed its prior guidance, saying it still expects 3rd-quarter adjusted earnings per share of 58¢ to 61¢ on sales growth of 13% to 15%. Full-year adjusted EPS are still slated to come in at $2.50 to $2.54 on sales growth of 10% to 11%. The outlook does not include a contribution from Welch Allyn, Hill-Rom said, forecasting a 10% addition to adjusted EPS in fiscal 2016.
“This transaction represents a compelling opportunity for Welch Allyn with the right partner in Hill-Rom, who appreciates our company’s special history, strengths and strategy. Combining with Hill-Rom will enable Welch Allyn to build on our important accomplishments over the last 100 years and play an even bigger role serving and meeting the evolving needs of patients and healthcare systems around the world. Hill-Rom and Welch Allyn share a commitment to patients and a history of delivering innovative solutions. Hill-Rom has the scale, geographic reach, experience and vision necessary to foster the next stage of growth and to ensure Welch Allyn’s continued success,” president & CEO Steve Meyer said in June.