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Greatbatch secures committed financing for $1.73 billion acquisition of Lake Region Medical
By Lisa Kerner
Charlotte, N.C., Aug. 27 – Greatbatch, Inc. will use cash on hand and committed financing from M&T Bank, Credit Suisse, and KeyBanc Capital Markets to fund its $1.73 billion acquisition of Lake Region Medical.
The cash-and-stock deal includes the assumption of $1 billion of Lake Region debt, according to a news release.
Greatbatch will pay about $478 million in cash and issue a total of 5.1 million shares of common stock and options to Lake Region Medical’s equity holders.
The acquisition is “transformative,” said Greatbatch president and chief executive officer Thomas Hook during a conference call on Thursday.
Hook expects the transaction to close in the fourth quarter. It is expected to be double-digit accretive to cash earnings per share in 2016 and to result in $60 million of pretax operating synergies in 2018.
When asked about cash flow and refinancing of the assumed debt, management said the numbers are still being finalized and cited the commitment letter from M&T Bank. The company is expecting the interest rate on the refinancing to be about 5¼%.
Pro forma leverage is anticipated at five times net debt-to-adjusted EBITDA at closing. Combined revenue will be about $1.5 billion.
Together, the companies will form one the largest medical device OEM suppliers in the world serving the cardiac, neuromodulation, vascular, orthopaedics and advanced surgical markets.
Greatbatch is a Frisco, Texas-based medical device company. It manufactures critical medical device technologies for the cardiac, neuromodulation, vascular and orthopaedic markets, and batteries for high-end niche applications in the portable medical, energy, military and environmental markets.
Lake Region Medical, based in Wilmington, Mass., provides outsourced manufacturing and engineering services to the medical device industry. The company was formerly known as Accellent Inc.
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