Merit Medical Systems (MMSI) to Acquire GE's (GE) Thomas Medical Products for $167M

November 26, 2012 4:04 PM EST
Merit Medical Systems, Inc. (Nasdaq: MMSI) today announced that it has entered into a stock purchase agreement to acquire Thomas Medical Products, Inc. ("Thomas Medical") from GE Healthcare in an all-cash transaction valued at approximately $167 million, subject to customary post-closing adjustments.

Thomas Medical, based in Malvern, Pennsylvania, designs and manufactures catheter-based vascular access delivery devices for diagnostic and therapeutic procedures in electrophysiology ("EP"), cardiac rhythm management ("CRM"), interventional cardiology and interventional radiology applications, primarily on an OEM basis. Merit believes Thomas Medical's products are recognized as "gold standard" by many of the leading CRM and EP market participants. Merit currently anticipates that during the year ending December 31, 2012 Thomas Medical will generate revenues of approximately $37 million and have gross and operating margins of approximately 55% and 44%, respectively, on a pro forma basis.

Merit intends to finance the full amount of the purchase price through the expansion of Merit's existing credit facility to $275 million, which Wells Fargo Bank has committed to provide in a single bank transaction. Merit expects the acquisition to be immediately accretive to its net earnings on a non-GAAP basis, adjusted for deal costs, one-time purchase accounting directives and amortization of intangibles. Furthermore, Merit has identified substantial growth and pull-through opportunities from the anticipated integration of Thomas Medical's products within its existing OEM business and capitalizing on its direct sales or dealer presence worldwide. Merit also expects it will be able to take advantage of tax benefits with approximately $43 million of net present value.

The transaction has been approved by Merit's board of directors and is subject to the satisfaction or waiver (in accordance with the provisions of the stock purchase agreement) of certain closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions. Merit currently anticipates that the proposed transaction will close prior to December 31, 2012. The transaction is not subject to a financing condition, as Merit has secured a commitment from Wells Fargo to expand Merit's existing credit facility to an amount that Merit believes will be sufficient to consummate the proposed transaction.

In connection with the proposed transaction, Piper Jaffray & Co. served as financial advisor to Merit and rendered a fairness opinion to Merit's board of directors. Raymond James Financial, Inc. also rendered a fairness opinion to Merit's board of directors. Parr Brown Gee & Loveless served as the legal advisor to Merit. Moelis & Company LLC served as financial advisor and Paul Hastings LLP served as legal advisor to GE Healthcare.

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