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Home » Merit Medical to acquire Thomas Medical for $167M

Merit Medical to acquire Thomas Medical for $167M

November 28, 2012
CenterWatch Staff

Merit Medical Systems, a manufacturer and marketer of proprietary disposable devices used primarily in cardiology, radiology and endoscopy, has entered into a stock purchase agreement to acquire Thomas Medical Products from GE Healthcare in a $167 million all-cash transaction, subject to customary post-closing adjustments.

Thomas Medical, based in Malvern, Penn., 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 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.

"We believe this transaction will help expand our market presence into new product categories, particularly in interventional cardiology," said Fred P. Lampropoulos, chairman and CEO of Merit. "A majority of cardiac rhythm access procedures utilize products of the nature manufactured by Thomas Medical. We believe substantial international expansion opportunities exist, especially in China, Japan, Russia and the Gulf states, as well as significant new product development opportunities based on know-how and existing intellectual property."

Lampropoulos continued,  "In addition, Thomas Medical has a number of existing electrophysiology products that are distributed by the larger medical device companies, as well as other EP products being developed. We believe this segment of the business, which likewise represents potential expansion into new product categories, has the potential to be a driver of substantial future growth."

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. 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.

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