Greatbatch
's (
GB
) Electrochem division, which offers high performance commercial
batteries, has inked a definitive pact to take over Oregon-based
battery supplier Micro Power Electronics for roughly $60 million in
cash. The deal also calls for assumption of debt and specific
acquisition-related payments and expenses.
The transaction is expected to close by end-2011. Greatbatch
plans to fund the acquisition with available cash and its existing
revolving credit facility.
Micro Power supplies custom battery solutions to the portable
medical, military and automatic identification and data collection
markets. Its coveted product portfolio complements Electrochem's
offerings for the portable medical, energy, military and
environmental industries.
The acquisition is expected to diversify Electrochem's revenues
by broadening its foothold in the portable medical battery market
and stimulating growth in other key areas. Electrochem plans to
retain Micro Power's Oregon facility which employs roughly 200
people.
Micro Power is expected to generate roughly $70 million in sales
in 2011. The acquisition is expected to be neutral to Greatbatch's
earnings (barring one-time acquisition related charges) in 2011 and
2012 and accretive thereafter.
Greatbatch is a leading producer and supplier of batteries,
capacitors and components used in implantable medical devices. The
company's top customers include
Boston Scientific
(
BSX
),
Johnson & Johnson
(
JNJ
),
Medtronic
(
MDT
) and
St. Jude
(
STJ
).
Greatbatch's smaller Electrochem division makes high performance
batteries for use in oil and gas exploration, oceanographic
equipment, seismic surveying equipment and aerospace. The division
accounted for roughly 14% of the company's sales in 2010.
Greatbatch has been acquiring complementary businesses over the
last few years to boost sales. The company's pipeline is healthy
with a number of products currently under development that are
expected to support growth in the long run. Moreover, Greatbatch
continues to invest in developing medical devices for its major OEM
clients.
We feel that operating results will be supported by strength at
the company's orthopedic business and strategic investments.
Moreover, synergies from cost-cutting and restructuring initiatives
are expected to support margin expansion. Our Outperform
recommendation on the stock is backed by a Zacks #2 Rank, which
translates into a short-term "Buy" recommendation.
BOSTON SCIENTIF (
BSX
): Free Stock Analysis Report
GREATBATCH INC (
GB
): Free Stock Analysis Report
JOHNSON & JOHNS (
JNJ
): Free Stock Analysis Report
MEDTRONIC (
MDT
): Free Stock Analysis Report
ST JUDE MEDICAL (
STJ
): Free Stock Analysis Report
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