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Smiths Medical to be sold to ICU Medical; voids deal with TA Transaction

Smiths Group plc has agreed the sale of Smiths Medical to ICU Medical, Inc. on terms that are superior to the previously announced transaction entered into with TA Associates on 2 August 2021.

The ICU Transaction delivers USD 0.4bn more value to shareholders and carries future material upside through both participation in ICU Medical equity and a USD 0.1bn ‘earnout’. In light of this, the Smiths board has withdrawn its recommendation of the TA Transaction, a press release states On 2 August 2021, Smiths announced that it had entered into an agreement for the sale of Smiths Medical to Trulli Bidco Limited, a wholly owned subsidiary of funds advised by TA Associates LLP. The TA Transaction valued Smiths Medical at an enterprise value of USD 2.3bn, plus an additional USD 0.2bn contingent on the future performance of Smiths Medical and was unanimously recommended by the Board. The TA Transaction was conditional upon the approval of Smiths shareholders and customary regulatory clearances and would have been expected to complete by the end of calendar year 2021. At the point of announcement, the TA Transaction was superior to all other proposals received during the separation process. After announcement of the TA Transaction, ICU Medical offered to acquire Smiths Medical on terms that are superior to those of the TA Transaction. The ICU Transaction values Smiths Medical at a headline enterprise value of USD 2.7bn, on a cash and debt free basis. After deduction of debt and other liabilities, the equity value of the ICU Transaction is USD 2.4bn, approximately USD 0.4bn higher than the TA Transaction. The ICU Transaction consideration is comprised of USD 1.85bn in cash and 2.5m of new ICU Medical shares, worth USD 0.5bn at ICU Medical’s closing share price on 7 September 2021 of USD 205.98, equivalent to approximately 10% of the fully diluted enlarged ICU Medical share capital. The ICU Transaction be conditional on receipt of certain merger and other regulatory approvals and the termination of the sale agreement with Trulli Bidco Limited. Under French employment laws, Smiths Medical is required to carry out an information and consultation process with the Social and Economic Committee of Smiths Medical France SAS. Whilst Smiths will ensure the views of the French Works Council are properly considered, the French Works Council opinion on the ICU Medical Offer is consultative and not binding on Smiths or ICU Medical. The Board announced that it is withdrawing its recommendation of the TA Transaction and accordingly. Paul Keel, CEO, Smiths Group plc, said: “Delivering on our commitment to maximise value, the ICU Transaction provides both a higher value for Smiths’ shareholders, as well as future value creation through our 10% holding of the enlarged combined group and a potential $0.1bn additional contingent consideration. We are focused on concluding this superior transaction and on driving Smiths Group forward, delivering on our significant potential as a leading industrial technology group united by shared purpose, business characteristics and a common operating model.” Vivek Jain, CEO, ICU Medical, Inc., said: “The combination of these two businesses makes sense for the medical device marketplace and fits well with ICU Medical’s existing business. By joining two complementary product portfolios to create a leading IV therapy company, we can help simplify customer workflows and add significant value and choice. Together, we will be a scaled global competitor and a US-based medical device company that increases the stability of the medical supply chain and can grow as clinical care models evolve. From an economic perspective, we believe we have presented a well-structured offer that considers the existing offer, minimizes risk, and offers upside to all stakeholders. We look forward to serving more customers as we continue to bring clinical and economic value to the marketplace.”

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March 28 2024 10:16 am V22.4.20-2
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