Baxter International Inc. (BAX), the maker of blood products and intravenous drugs, said it will buy Synovis (SYNO) Life Technologies Inc. for $325 million to acquire its line of soft-tissue repair products.
Synovis shareholders will get $28 a share in the deal, Deerfield, Illinois-based Baxter said in a statement today. That represents a 52 percent premium over yesterday’s closing stock price for St. Paul, Minnesota-based Synovis. The acquisition is valued at $260 million after adjusting for the target company’s net cash, Baxter said.
Synovis, which had $68.6 million in sales last year, makes devices and biological products used in obesity surgery, hernia repairs and cardiac procedures. The acquisition will expand Baxter’s regenerative medicine and biosurgery business, the companies said in the statement.
“Baxter is continuing to broaden its offerings with these tuck-in acquisitions,” said Michael Matson, an analyst with Mizuho Securities USA Inc. in New York. “It seems to fit well with their regenerative medicine business, extending into the soft tissue area. It’s a small company, kind of a niche player, and it does makes sense.”
Baxter fell less than 1 percent to $49.30 at 4:10 p.m. in New York. The shares have fallen 2.1 percent in the 12 months. Synovis surged 51 percent to $27.78.
The deal is expected to be completed in the first quarter of 2012 and will reduce full-year earnings for Baxter next year by about 4 cents a share, the companies said. The purchase probably will have no effect on 2013 earnings and be “increasingly accretive” after that, they said.
“It’s not going to move the needle in the near term, but these are big markets and could add meaningful revenue years down the road,” Matson said in a telephone interview. “It’s a trade off: short-term dilution for longer-term growth.”
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