ANGO and Microsulis Work Out Deal - Analyst Blog
January 24 2013 - 10:00AM
Zacks
Consolidating its earlier
partnership, AngioDynamics (ANGO) inked a
definitive agreement to purchase certain assets of Mircosulis
Medical Ltd. The transaction is expected to close this month,
subject to standard conditions.
AngioDynamics will make upfront
payment of $10 million along with $5 million on Dec 31, 2013 and
assume $1 million of liabilities. On the basis of its performance
over the next nine years, stakeholders at Microsulis might be
entitled to earn-out payments.
The acquisition is expected to be
neutral to AngioDynamics’ adjusted earnings for fiscal 2013.
However, the deal will create value for the company’s shareholders
with considerable accretion to fiscal 2014 adjusted
earnings.
Following the acquisition,
AngioDynamics will serve a market size of $250 million for tissue
ablation systems. The company expects to emerge as a pioneer in the
global tissue ablation market.
According to the agreement,
Microsulis’ leading microwave ablation technology will be a part
AngioDynamics portfolio. The company will also gain exclusive
worldwide distribution rights for the technology. Further,
AngioDynamics expects to introduce the second generation Accu2i
pMTA applicator in the domestic market after closing the
acquisition.
About
Microsulis
Denmead, England-based Microsulis
specializes in minimally invasive, microwave ablation technology
for the coagulation of soft tissue. The medical device company has
a global footprint with its systems installed in over 80
hospitals.
Microsulis’ manufactures Accu2i
pMTA microwave ablation system with regulatory clearances in the
U.S. as well as Europe. In December 2012, the U.S. Food and Drug
Administration (FDA) also granted 510(k) clearance to the company’s
upgraded Accu2i pMTA applicator.
Earlier, in March 2012,
AngioDynamics and Microsulis entered into a strategic partnership
wherein AngioDynamics gained the exclusive overseas distribution
rights for Microsulis’s Accu2i pMTA microwave ablation system from
May 2012 to December 2013. The agreement granted AngioDynamics the
exclusive option to purchase all the global assets and certain
liabilities of Microsulis until September 2013.
Our Take
AngioDynamics’ thermal ablation
business has been stagnant over the last three years. In fiscal
2012, the revenues from the franchise stood at $23 million. The
company envisages significant revenue synergies from the latest
deal as reflected in the forecast of 20% annual growth over the
following three years.
AngioDyanmics’ aggressive acquisition strategy targets high-growth
areas. The company’s current focus on the burgeoning oncology
market should yield positive results. The stock carries a Zacks
Rank #3 (Hold). While we prefer to remain on the sidelines on
AngioDyanmics, other medical stocks such as Merit
Medical (MMSI), Cantel Medical (CMN) and
Cyberonics (CYBX), which carry a Zacks Rank #1
(Strong Buy), are worth considering.
ANGIODYNAMICS (ANGO): Free Stock Analysis Report
CANTEL MED CORP (CMN): Free Stock Analysis Report
CYBERONICS INC (CYBX): Free Stock Analysis Report
MERIT MEDICAL (MMSI): Free Stock Analysis Report
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