Medical technologies and surgical devices company
) recently announced a definitive agreement for the acquisition of
Massachusetts-based healthcare company
Viking Systems, Inc.
) for 27 cents per share or $22.5 million, in cash. The deal has
been approved by the board of directors of both companies and is
expected to close in the fourth quarter of 2012.
Financial Impact of Acquisition
Initially, the acquisition of Viking is expected to have a
neutral impact on adjusted earnings. However, Conmed will incur
consolidation-related transitional charges due to relocation of its
research and marketing team from California to
Per the terms of the agreement, Conmed plans to purchase
Viking's outstanding shares for 27 cents per share by initiating a
tender offer by one of its wholly-owned subsidiaries. After the
completion of the tender offer, Conmed will buy the remaining
shares through a second-step merger at the same price of 27 cents.
The offer price of 27 cents per share represents a 42% premium over
Viking's closing stock price of 19 cents per share on August
Additionally, some Viking shareholders have entered into a
Tender and Voting Agreement. Per the agreement, these shareholders
have agreed to tender all shares of Viking's common stock
beneficially owned by them. This represents roughly 43% of Viking's
issued and outstanding shares, as of August 13.
The tender offer is subject to various terms and conditions
(except financing condition) and is expected to commence by August
Acquisition to Boost Surgical Video Products
Conmed plans to integrate its 2D surgical video research and
marketing team located at Santa Barbara, California with the Viking
group in Massachusetts to build on its surgical video product
portfolio. Viking Systems' key product is the 3D-HD Vision System,
which is a cutting-edge device used during minimally invasive
laparoscopic surgery. It is mainly used for gynecologic, urologic,
bariatric, neurologic, cardiac and general surgery.
The passive glasses and flat screen monitor enabled 3D-HD Vision
System is the only 3D imaging system that has been approved by the
U.S. Food, Drug and Administration (FDA) and has also received the
European CE Mark. It is also the only 3D-HD System which is
available as a single unit, unlike other 3D-HD visualization
systems which are available in the market as a part of expensive
robotic systems. Apart from the three dimensional vision system,
Viking also produces 2D digital cameras which are sold to third
Conmed is a medical products maker, specializing in surgical
instruments and devices. A large percentage of the company's
products are designed for minimally invasive surgery, a trend that
is extremely popular these days. Thus, we believe the inclusion of
Viking's innovative technology with Conmed's offerings will further
enhance the company's product portfolio, which in turn will benefit
However, Conmed operates in a highly-competitive orthopedic
surgery market against much larger, more technically-competent
companies such as
Smith & Nephew
). Moreover, we remain concerned about Conmed's soft capital
product sales due to the ongoing dismal macroeconomic conditions.
The company has lowered its sales guidance for 2012 in its second
quarter report, following such poor results. We maintain our
'Neutral' recommendation on Conmed. The company carries a
short-term Zacks #4 Rank (Sell).
CONMED CORP (CNMD): Free Stock Analysis Report
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SMITH & NEPHEW (SNN): Free Stock Analysis
STRYKER CORP (SYK): Free Stock Analysis Report
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