By Lisa Kerner
Charlotte, N.C., April 7 - Kinetic Concepts, Inc. agreed to acquire LifeCell Corp. for $51 per share in a deal valued at $1.7 billion.
The offer price is an 18% premium over the closing price of LifeCell's stock on April 4 and a 26% premium over the 90-day volume-weighted average trading price, a joint company news release stated.
Both companies' boards of directors have unanimously approved the transaction.
A Kinetic Concepts subsidiary will begin a cash tender offer to acquire all outstanding shares of LifeCell's common stock.
The merger, slated to close upon approvals, is contingent on at least a majority of LifeCell's shares being tendered.
Kinetic Concepts said it will finance the transaction using cash on hand and proceeds from a fully underwritten debt financing from Bank of America and JPMorgan Chase Bank.
According to the release, the bank financing includes syndicated term loans and a revolving credit facility. Kinetic Concepts may access the equity-linked markets during 2008, subject to market conditions, the company said.
The transaction, Kinetic Concepts said, is expected to be initially dilutive to the company's cash earnings per share, becoming accretive to cash earnings per share during 2009 and "significantly accretive" in 2010 and beyond.
Following the acquisition, LifeCell will operate as a new global biosurgery division within Kinetic Concepts led by current LifeCell president Paul Thomas, who will also join Kinetic Concepts' executive committee, the release said.
Kinetic Concepts said it expects the combined company to generate revenue of some $2 billion in 2008 and employ more than 7,000 people.
Benefits of the Kinetic Concepts and LifeCell merger include diversification of Kinetic Concepts' revenue stream, global biosurgical leadership and enhanced research and development capabilities, the companies said.
"This combination allows us to accelerate our strategy to increase Kinetic Concepts' presence in the operating room and will leverage our broad global market reach to drive future growth of LifeCell's products," Kinetic Concepts president and chief executive officer Catherine Burzik said.
J.P. Morgan Securities Inc. advised Kinetic Concepts, and Merrill Lynch & Co. advised LifeCell.
Kinetic Concepts is a San Antonio medical technology company specializing in advanced wound care and therapeutic support systems.
LifeCell provides biological products for soft tissue repair, including its Alloderm regenerative tissue matrix for plastic reconstructive, general surgical, burn and periodontal procedures. The company is located in Branchburg, N.J.
| Acquirer: | Kinetic Concepts, Inc.
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| Target: | LifeCell Corp.
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| Announcement date: | April 7
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| Transaction total: | $1.7 billion
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| Price per share: | $51.00
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| Expected closing: | Upon approvals
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| Stock price of target: | Nasdaq: LIFC: $43.15 on April 4
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