Merit Medical Signs Purchase Deal With BD For Divestment Assets

(RTTNews) - Merit Medical Systems Inc. (MMSI) said that it has signed an asset purchase agreement with BD or Becton, Dickinson and Company to acquire certain assets which BD proposes to sell in connection with its proposed acquisition of C.R. Bard, Inc.

Merit's proposed asset acquisition is subject to the closing of BD's proposed acquisition of Bard as well as other usual and customary closing conditions.

The assets to be acquired are soft tissue core needle biopsy products currently sold by BD under the trade names of Achieve Programmable Automatic Biopsy System, Temno Biopsy System and Tru-Cut Biopsy Needles.

Additionally, Merit proposes to acquire the Aspira Pleural Effusion Drainage Kits and the Aspira Peritoneal Drainage System currently marketed by Bard. Merit understands these products are currently sold primarily in the United States.

The purchase price for the product lines and related assets to be acquired is $100 million, subject to adjustment for fluctuations in the value of transferred inventory.

Merit anticipates its debt to adjusted EBITDA will increase from approximately 2.20 to approximately 2.70.

This transaction is expected to create value for Merit's shareholders and to be accretive to both GAAP and non-GAAP earnings in 2018, including the anticipated impact of incremental interest expense associated with financing the transaction.

Merit's management expects the acquisition to provide incremental annual revenues in the range of $42-48 million, adjusted gross margins for the subject product lines in the range of 60-70%, and, over a period of six to twelve months, to be accretive by 50-120 basis points to Merit's adjusted gross margins.

The transaction is also expected to expand operating margins and increase cash flow. Merit's management expects the acquisition to provide $0.10-$0.19 in adjusted non-GAAP earnings per share accretion ($0.01 to $0.08 in GAAP earnings per share accretion) in fiscal year 2018.