In a bid to beef up its health care business, Tokyo-based
leading chemical manufacturer Asahi Kasei has agreed to take over
Resuscitation devices maker
ZOLL Medical
(
ZOLL
) in a deal worth roughly $2.21 billion. The transaction, which has
been cleared by the Boards of both companies, is expected to
consummate in second-quarter 2012.
ZOLL Medical is a leading player in the global market for
external defibrillators (worth more than $1 billion) and competes
with Physio-Control, a wholly owned unit of
Medtronic
(
MDT
), and
Philips
(
PHG
).
The company makes the LifeVest wearable defibrillator, a
lightweight device which is worn outside the body by patients at
risk of sudden cardiac arrest ("SCA"). Its sales soared 18% year
over year to $133.7 million in the most recent quarter on the heels
of robust revenues from LifeVest, backed by its Temperature
Management business.
Per the deal, Asahi will make a cash tender offer to buy the
outstanding shares of ZOLL Medical for $93 a share. The purchase
consideration represents a 23.8% premium over ZOLL's closing price
on March 9. The offer is expected to begin within ten business days
and will be open for at least twenty business days.
Closing of the tender offer is subject to customary conditions
including appropriate regulatory approvals and the minimum tender
of at least two-thirds of ZOLL's outstanding shares. The company's
Board has recommended its shareholders to accept the offer and
tender their shares once the offer is made.
Following the closure of the tender offer, Asahi plans to
implement a second-step merger, under which the remaining ZOLL
shares (not tendered) will be converted into the rights to receive
equivalent cash price per share as quoted in the offer.
Pursuant to the completion of the deal, ZOLL will become a
fully-owned subsidiary of the Asahi Kasei Group while retaining its
existing management team and business operations.
The agreement builds upon the partnership between the two
entities (inked in July 2011). The deal provided Asahi with the
exclusive distribution rights to ZOLL's AED PLUS automated external
defibrillator ("AED") in Japan (the world's second-largest external
defibrillator market).
The acquisition will enable Asahi to leverage ZOLL's leadership
in resuscitation technologies to accomplish its long-term goal of
creating a globally competitive health care business with a unique
focus on critical care. It extends the development of the
company's "Health Care for Tomorrow" project which focuses, among
other things, on the resuscitation sector in which ZOLL has a
strong global presence.
Our Outperform recommendation on ZOLL Medical is backed by a
Zacks #2 Rank, which translates into a short-term Buy rating.
MEDTRONIC (
MDT
): Free Stock Analysis Report
KONINKLIJKE PHL (
PHG
): Free Stock Analysis Report
ZOLL MEDICAL CO (
ZOLL
): Free Stock Analysis Report
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