By AMANDA PEDERSEN
Medical Device Daily Senior Staff Writer
Teleflex (Limerick, Pennsylvania), a provider of medical devices for critical care and surgery, said it signed a definitive agreement to acquire substantially all of the assets of LMA International (Singapore) for $343.5 million in Singapore dollars, which at current exchange rates translates into roughly U.S.$276 million.
LMA provides laryngeal masks and products used extensively in anesthesia and emergency care. The company reported revenue of $123.9 million in its latest fiscal year ended Dec. 31, 2011. LMA has offices in Jersey, Channel Islands and Singapore, manufacturing facilities in Utah and Malaysia and subsidiaries with direct selling functions in the U.S., Canada, Australia, New Zealand, Germany, Italy and Singapore.
The board of directors of both Teleflex and LMA have approved the proposed transaction, which is subject to LMA shareholder approval, regulatory approvals and other customary closing conditions.
In separate transactions, the company also said it signed definitive agreements with the shareholders of Intavent Direct Limited (IDL) and affiliates to acquire the LMA branded laryngeal mask supraglottic airway business and certain other products in the UK, Ireland and Channel Islands. The business reported revenue of $8.2 million in its latest fiscal year ended Dec. 31, 2011.
"These acquisitions will be complementary to Teleflex's current anesthesia and respiratory businesses, creating a stronger, more diversified business segment with more than $530 million in combined annual sales," Benson Smith, chairman, president/CEO, told investors and reporters during a conference call Tuesday. "The addition of these businesses significantly strengthens and expands our global anesthesia product portfolio, providing opportunities with respect to key clinical U.S. and international call points, while also further strengthening our GPO relationships."
Brown Brothers Harriman is acting as financial advisor and Simpson Thacher & Bartlett is acting as legal counsel to Teleflex in the transaction.
The transactions are expected to be completed during the fourth quarter.
While LMA appeared to have a strong growth rate in 2011, previous years were not as strong, which Smith addressed during Tuesday's call.
"LMA had what I would characterize as a spotted growth trajectory over the last five years, going back. Some of that, we believe, came from de-focusing their efforts against the laryngeal masks business and attempting to kind of broaden out their product portfolio in areas where they weren't particularly competitive," Smith said. "We've seen a resurgence of growth in the last year or so as a result of their re-concentration of efforts back on the (laryngeal) masks. We see a similar growth pattern looking forward to what I would characterize as Teleflex's overall growth expectations over the next three to five years with slightly slower growth in the U.S. and Europe and faster growth in the Asia, Pac, and Latin America regions."
He added that, based on Teleflex's assessment of LMA's future R&D efforts and improvements, the business is expected to essentially be at Teleflex's own projected growth earnings for the next three to five years.
Smith also told call listeners that LMA is in an "extremely low taxation area" and, because of that, Teleflex does expect to see some increase in tax rates as LMA is folded into the company.
Teleflex intends to finance the transaction through cash off the balance sheet, with a substantial portion of the deal price being paid from its outside the U.S. cash.
The company has been actively acquiring businesses this year with six transactions since May and a little more than $370 million paid for those businesses.
"Certainly we do not expect to do another acquisition of this size," Smith said during the call. "We do have a target list of much smaller deals in that late-stage technology arena." He added that up to this point the deals Teleflex has done this year fall into different business units, helping to spread out the costs associated with integrating those businesses into the company. "So we think it's well within the range of biting off what we can chew," he said.
Amanda Pedersen, 912-660-2282;
Published August 15, 2012