As a concern which works towards innovation and manufacture of
medical devices for minimally invasive procedures,
) 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
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
Bank of America
) and KeyBank National Association, a wing of
). 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
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
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.
ANGIODYNAMICS (ANGO): Free Stock Analysis
BANK OF AMER CP (BAC): Free Stock Analysis
BARD C R INC (BCR): Free Stock Analysis Report
BOSTON SCIENTIF (BSX): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
KEYCORP NEW (KEY): Free Stock Analysis Report
To read this article on Zacks.com click here.