Renowned medical devices maker
) recently announced a definitive agreement to purchase leading
thoracic sealing company Neomend Inc. for $140 million in cash
and will pay contingent consideration of up to $25 million in the
future, based on the achievement of sales-based milestone
payments through 2016.
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The entire purchase price for this acquisition was funded through
the issuance of commercial paper. Bard plans to merge the
acquired entity with its Davol subsidiary, which specializes in
the development of surgical specialty products.
Privately-owned Neomend manufactures surgical sealants and
anti-adhesive products used during surgical procedures. Its key
product, the Progel Air Leak Sealant is approved by the Food and
Drug Administration (FDA) and is used for sealing of air leaks
during thoracic surgery. The sealant has also received the CE
Mark clearance for lung sealing and for its use as an
In addition, clinical results of Neomend's Progel Pleural Air
Leak Sealant indicate that the product is capable of lowering
post-operative air leaks to a large extent as well as reduce
Acquisition to Boost Surgical Specialties Product
The acquisition of Neomend will enable Bard to expand into the
lucrative $1 billion market for surgical specialties offerings.
Neomend's innovative technology and pipeline products offer
attractive opportunity for future clinical indications across a
vast range of surgical specialties applications. Moreover, the
addition of an FDA-approved technology platform further
strengthens Bard's position in this market segment.
In the last reported third quarter of 2012, revenues from Bard's
Surgical Specialties business remained flat year over year at
$107.7 million. However, it inched up 2% in terms of constant
currency. We believe that the Neomend acquisition is in line with
Bard's strategy to expand into the global markets via strategic
With a market cap of $7.94 billion, CR Bard is a well-diversified
medical device company, providing a complete line of products to
treat medical conditions through less invasive procedures in a
cost-effective manner. We expect new product launches to drive
organic revenue growth and help CR Bard meet its sales objective.
We are also impressed by the company's initiative to expand into
emerging markets with attractive growth opportunities.
However, increasing competition, fluctuating currency,
pricing/volume pressure and an overall tough U.S. economy remain
areas of concern. The company faces strong competition from
Boston Scientific Corporation
Johnson & Johnson
We currently have a Neutral recommendation on C.R. Bard. The
stock currently retains a Zacks #3 Rank, which translates into a
short-term "Hold" rating.