Medical technologies major C. R. Bard, Inc. (BCR) entered a definitive agreement to acquire a leading developer and supplier of plant based hemostatic agents Medafor, Inc. C. R. Bard has agreed to purchase the privately-held company for $200 million at a closing date later this year, In addition, BCR will provide future contingent payments up to $80 million based on revenue-based milestones through Jun 30, 2015.
The transaction is formed as a merger and has been approved by boards of directors of both the companies. However, it is subject to an approval by Medafor’s shareholders and customary regulatory review.
The acquisition will help Bard gain access to a proprietary technology platform and expand its global footprint. It will boost the company’s surgical specialties portfolio (particularly surgical hemostats) in its Davol subsidiary.
Medafor has many promising future products in the pipeline. C.R. Bard expects the acquisition to contribute about 1% to revenue growth in 2014, and a few cents to adjusted earnings per share in 2013 but neutral to 2014.
Medafor is famous for its Arista MPH Hemostat agent, which controls bleeding and reduce hemorrhage when conventional means become ineffective or impractical. Arista is a plant-based platform using Microporous Polysaccharide Hemospheres technology that has been proved to be safe, effective and convenient to use in many surgical procedures.
Surgical hemostats provide greater visibility of the surgical site and reduce postoperative complications and the potential for costly transfusions. Currently, the global market for surgical hemostats is over $1.4 billion.
C.R. Bard reported adjusted earnings of $1.42 per share in the second quarter of the year and beat the Zacks Consensus Estimate by 4 cents. Revenues increased 2% (3% at constant exchange rate or CER) on a year-over-year basis to $759.9 million and surpassed the Zacks Consensus Estimate of $751 million.
BCR expects revenue growth in the range of 1%–3% at CER, excluding any royalties from the Gore litigation in the third quarter of 2013. The company expects adjusted earnings in the range of $1.37 to $1.41 a share in the quarter.
Currently, BCR carries a Zacks Rank #3 (Hold). Other medical stocks that are worth considering include Alphatec Holdings, Inc. (ATEC), The Cooper Companies Inc. (COO) and Align Technology Inc. (ALGN). They carry a Zacks Rank #2 (Buy).
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