Angio Completes Key Acquisition - Analyst Blog

By Zacks Equity Research,

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As a concern which works towards innovation and manufacture of medical devices for minimally invasive procedures, AngioDynamics ( ANGO ) has completed its previously announced acquisition of Navilyst Medical. The cash and stock deal was worth $355 million on the basis of  Navilyst Medical's closing price of $12.44 on May 21, 2012.

the management believes that the company will increase proficiency and competitiveness on the basis of economies of scale, post-acquisition. The enhanced financial profile before the onset of its next fiscal year has boosted management confidence in achieving the expected financial outlook.

The acquisition is expected to increase Angio's market share to twice the existing size for the vascular access market. This is because the company will be in a position to offer an enhanced product portfolio to its customers after the acquisition. The addition of the well regarded NAMIC fluid management brand is a major benefit for Angio.

The brand has a strong international presence and will allow the company to leverage sales of its peripheral vascular portfolio. Furthermore, Angio is also scheduled to benefit from the technical knowledge and skill-set inherent at Navilyst Medical.

Despite its worldwide presence, the domestic market contributes 85% of total revenue to Angio. The acquisition will allow the company to focus on international expansion. The deal offers an invaluable opportunity for increased profitability, sales force improvement and generation of significant cash flow for Angio.

The acquisition is also expected to be accretive to Angio's adjusted earnings per share by at least 8 cents during fiscal 2013. The financial impact of the transaction includes pro forma net sales of about $3.4 billion during fiscal 2013. The expected free cash flow of $50 million will also restore the capital structure of the company and preserve its liquidity.

According to the terms of the agreement stated on January 31, 2012, Angio made payments of $372 million in cash and stock to acquire Navilyst Medical from Avista Capital Partners. Angio was able to finance the transaction by drawing $150 million as acquisition debt and through cash in hand of $97 million.

The acquisition debt of $150 million was loaned from J.P. Morgan ( JPM ), Bank of America ( BAC ) and KeyBank National Association, a wing of KeyCorp ( KEY ). The company also issued about 9.5 million additional shares to meet the transaction terms.

Navilyst Medical is a medical solutions provider with a significant emphasis on the markets for cardiology, radiology and oncology. In 2008, Avista Capital Partners, a private equity firm acquired the company from Boston Scientific ( BSX ).

As per the terms of the transaction, investment funds affiliated with Avista Capital Partners now own 9.4 million shares of AngioDynamics Common Stock and have inked a stockholder agreement with the company. Angio has also incorporated two additional positions in its management to accommodate the partners of Avista in order to tap their experience and know-how.

Angio is set to become an industry leader on the back of the aforementioned facts. However, it faces tough competition from industry giant CR Bard ( BCR ).

Angio currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also maintain our long-term Neutral recommendation on the stock.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: ANGO , BAC , BCR , BSX , JPM

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