CPTS Conceptus, Inc. (MM)

In a bid to strengthen its contraceptive portfolio Bayer (BAYRY) inked a deal to buy Conceptus Inc. (CPTS) for $31.00 per share or approximately $1.1 billion in cash. Conceptus focuses on developing and commercializing innovative device-based solutions in permanent birth control.

Bayer intends to launch a public tender offer to acquire all shares of Conceptus within the next 10 days. The transaction is expected to close by mid-2013.

Bayer’s impending acquisition of Conceptus will add the Essure permanent (non-surgical) birth control system to its product portfolio. We note that Conceptus’ Essure procedure was approved in 2002 in the US and is well accepted in the market. Bayer’s contraceptive portfolio currently includes drugs like Yasmin/Yaz and Mirena among others.

Successful completion of the acquisition would ensure the presence of short-term, long-term and permanent contraceptive choices for women in Bayer’s portfolio. The Essure procedure is a strategic fit in Bayer’s HealthCare business.

Bayer mentioned in its press release that more than 700,000 women around the world have already undergone this procedure. Conceptus reported net sales of $141 million for the year 2012.

The HealthCare segment recorded revenues of €4.4 billion in the first quarter of 2013, up 2.3% year over year. Bayer expects revenues from the HealthCare segment to come in at around €19 billion in 2013.

We remind investors that the contraceptive market has players like Teva Pharmaceutical Industries Ltd. (TEVA).

Bayer, a large cap pharma company, presently carries a Zacks Rank #4 (Sell). Other large cap pharma companies such as Abbvie Inc. (ABBV) currently look more attractive. Abbvie carries a Zacks Rank #2 (Buy).

 
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