Medafor agrees to be purchased by C.R. Bard unit
[Star Tribune (Minneapolis, MN]
Medafor Inc., a Brooklyn Center-based maker of a novel blood clotting products that fought off a hostile takeover bid by a major shareholder in 2010, has an agreement to be purchased by a division of medical products maker C.R. Bard Inc.
The division, called Davol Inc., will pay $200 million in cash now for Medafor and up to $80 million more if revenue targets are hit in the next two years.
That values Medafor's privately held shares at $6.37 per share. The revenue-based incentives are valued at $2.82 per share.
"This transaction and the premium price we were able to get for our shares, underscores the soundness of our business strategy and how well our employees executed against that plan," Medafor CEO Gary Shope said in a letter to shareholders and employees.
The transaction has been approved by both companies' boards of directors, but is subject to approval by Medafor's shareholders and customary regulatory review. C.R. Bard said it expects the deal to close later this year and that Medafor will add approximately 1% to its 2014 revenue. The company, a maker of vascular, oncology and surgical products, had revenue of about $3 billion last year.
In 2010, Medafor fought off a hostile takeover bid from one of its major shareholders, CryoLife Inc., an Atlanta-based biomedical device company. CryoLife had the exclusive rights to distribute Medafor's blood clotting technology in the U.S. and some international markets. It had also made offers for Medafor in 2008 and 2009, which Medafor also rebuffed.
The Medafor board dismissed CryoLife's 2010 offer as "grossly inadequate." CryoLife, abandoned their $2 a share cash and stock bid after several months. Shope told the Star Tribune in 2010 the company had spent $1.2 million in legal fees fighting CryoLife.
In his letter on Monday, Shope said that while Davol might be "an obvious partner" for Medafor, the company's board had considered many alternatives since the CryoLife saga, including an initial public offering, deals with other firms and continuing to operate on its own.
"In brief, the board determined that this was the right partner and the right transaction to achieve maximum value for our shareholders," he wrote.
For potential acquirers, Medafor's appeal has been its plant-based Microporous Polysaccharide Hemospheres technology, which is used in its Arista MPH Hemostat product. The product rapidly dehydrates blood and accelerates the body's natural blood-clotting process.
According to C.R. Bard's statement on the acquisition, the global market for surgical hemostats is over $1.4 billion. "The Arista hemostat provides a great alternative to other commercially available hemostats while providing strong synergy with our Progel Sealant technology and sales channel." Timothy Ring, C.R. Bard's chairman and CEO, said in the merger announcement.