Twin Acquisitions for Teleflex - Analyst Blog


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Teleflex Incorporated ( TFX ), a global leader in medical devices, recently inked a definitive agreement to acquire all the assets of Willemstad, Netherlands based LMA International N.V. for $276 million in cash.

The acquisition is expected to enhance Teleflex's anesthesia product line as LMA is a global provider of medical equipment to anesthetists. LMA is also considered to be a worldwide leader in laryngeal masks which will allow Teleflex to gain market leading position for the product.

The transaction has been approved by the Board of both the companies. The agreement is subject to the consent of LMA's shareholders, regulatory approvals and other standard closing conditions.

LMA was founded in 1998 and is listed on the Mainboard of the Singapore Exchange. The company recorded revenues of $123.9 million in 2011.

Separately, Teleflex announced that it had forged a definitive agreement with the stockholders of Intavent Direct Limited to buy LMA's laryngeal mask supraglottic airway business and other equipment in the UK, Ireland and Channel Islands. Intavent is the leading supplier of airway devices in the UK. The revenues for the business line came in at $8.2 million in 2011.

Conjointly, Teleflex expects the acquisitions to be accretive to the company's adjusted earnings per share in the range of 3 cents to 4 cents for 2012 and 35 cents to 40 cents for 2013. This projection excludes non-recurring purchase accounting items and other costs associated with takeovers and mergers.

Collectively, these acquisitions will expand Teleflex's anesthesia and respiratory care business line. This will result in a well-regarded, highly diversified business segment with annual sales of $530 million or higher. Per management, the acquisitions will also extend the company's supply chain. The company intends to achieve this through improved relationships with group purchasing organizations.

Teleflex expects to complete both the acquisitions in the fourth quarter of 2012. Its financial advisor is Brown Brothers Harriman & Co. while Simpson Thacher & Bartlett LLP is acting as the legal counsel for both agreements.

Teleflex, headquartered in Limerick, Pennsylvania, is a manufacturer and provider of medical devices used in critical care and surgery. Its move to divest OEM orthopedic along with the strategy of developing new, innovative products should help improve its financial performance in the long run. The company's focus on profitable and consistent growth with new product introduction and portfolio expansion via acquisition is expected to yield results.

However, Covidien ( COV ), C.R. Bard ( BCR ) and CareFusion ( CFN ) which operate in similar business segments present a tough competitive landscape for Teleflex. Additionally, the company operates in a seasoned regulatory environment. The demand for its products is susceptible to healthcare reimbursement systems in the domestic as well as the international market.

Teleflex currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. 

BARD C R INC (BCR): Free Stock Analysis Report
CAREFUSION CORP (CFN): Free Stock Analysis Report
COVIDIEN PLC (COV): Free Stock Analysis Report
TELEFLEX INC (TFX): Free Stock Analysis Report
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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: BCR , CFN , COV , TFX

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