Syneron Medical Ltd. (NSDQ:ELOS) closed a deal to snap up one of its main rivals, Candela Corp. (NSDQ:CLZR), for $65 million, leaving its shareholders owning 80 percent of the company and former Candela owners with a 20 percent stake.
The consummation of the deal, first announced Sept. 9, 2009, means Candela shareholders will receive 0.2911 Syneron shares for each share of Candela, or $2.84 per share, according to regulatory filings.
Candela shares were trading at $3.13 as of about 12:30 Jan. 5. Syneron shares were trading at $10.84 around that time.
Yokneam, Israel-based Syneron said the deal will see Wayland, Mass.-based Candela become a subsidiary of the Israeli firm, maintaining both its brand and its Bay State operations. Syneron’s North American headquarters will stay in Irvine, Calif., with Candela keeping its Wayland base and its subsidiary operations in Australia, France, Germany, Italy, Japan, Portugal, Spain and the United Kingdom. Effective today, its shares will be de-listed from the NASDAQ exchange and begin trading under Syneron’s ELOS ticker.
Syneron CEO Louis Scafuri, who will become chief of the new combination, said the deal creates the world’s largest cosmetic medical device company. Candela CEO Gerard Puorro will join Syneron’s board of directors and “other key executives from Candela” will join the management team, Scafuri said.
Syneron CFO Fabian Tenenbaum said the short-term focus will be on “achieving cost savings through synergies and reduced operating expenses at both companies.”
“We believe these cost saving programs, which are already in place, will position the company to be profitable and the transaction to be accretive to earnings as the global economic environment strengthens,” Tenenbaum said.
Syneron spokeswoman Catherine Kniker told MassDevice in an email that the merger will see each brand maintaining separate sales forces. Syneron will also put “aesthetic practice consultants” into the field, she wrote, “with the goal of raising the industry standard for sales support and ensuring customers acquire the best solution for their current and long-term needs of their practice.”
“We have a uniquely complementary product portfolio with no real overlap. We intend to commit capital to expand capacity in strategic product segments and to meet customer requirements with an acute focus on innovation, safety and efficacy,” Kniker wrote.
Asked whether the merger would mean layoffs for Candela or Syneron employees, Kniker wrote that some workers could lose their jobs as the company works to improve “organizational effectiveness and to align our people with our strategic imperatives.”
“This will require refocusing of some programs and may shift our resource needs and could impact a limited number of employees,” she wrote.
The closing sets the stage for the continuation of a prolonged legal battle against both companies being waged by Palomar Medical Technologies. That Burlington, Mass.-based firm sued Candela and Syneron in the U.S. District Court for Massachusetts, alleging infringement of a pair of hair-removal technology patents.
The U.S. Patent and Trademark Office handed Palomar a pair of wins earlier this year, affirming the validity of both patents and multiple new claims within them.
And the European Patent Office upheld the patents in May as “novel and inventive” over its competitors’ intellectual property.
Candela ended the first quarter of fiscal 2010 — its last as a stand-alone entity — with more than $23 million in the bank, down slightly from the same period last year but still enough to cover about a third of the price Syneron will pay.
During the three months ended Sept. 26, 2009, Candela posted a net loss of $3.6 million on about $26.2 million in sales, compared with a net loss of $4 million on sales of $26.6 million during the same period in 2008.
Company officials said the quarterly results included $2.3 million in expenses related to the merger.