In 2011, the medical device sector posted a total of 170 deals, according to Deal Search Online, the M&A database from Irving Levin Associates. And according to revealed prices, 2011 had a grand total of $63.5 billion in medical device merger and acquisition transactions.
We delved a bit deeper into the five largest medical device M&A deals of 2011, as outlined by Irving Levin Associates.
1. Johnson & Johnson acquired Synthes GmbH. Back in April, Johnson & Johnson acquired Synthes, Inc., a global manufacturer of orthopedic devices, to the tune of CHF159 per share, or $21.3 billion. The transaction is still expected to close during the first half of this year, and as a result, Synthes and the DePuy Companies of Johnson &Johnson will become the largest business within the Medical Devices and Diagnostics segment of the company. "DePuy and Synthes together will create the most innovative and comprehensive orthopedics business in the world and enable us to better serve clinicians and patients worldwide," said Bill Weldon, chairman and CEO of Johnson and Johnson.
2. Danaher acquired Beckman Coulter. In February of last year, Danaher acquired medical diagnostic manufacturer Beckman Coulter. The deal, valued at $6.8 billion, included debt assumed and net of cash acquired. Beckman Coulter became part of Danaher's life sciences and diagnostics segment, joining its new partners Leica, AB Sciex, Radiometer, and Molecular Devices. "The premium paid by Danaher far exceeds recent IVD deals, which surprised many in the industry, including speculators and Beckman's equity analysts," said Jon Vance, director and head of medtech investment banking at Avondale Partners. "Danaher is clearly confident that it can resolve Beckman's current regulatory and management issues, but more importantly, that it can quickly leverage channel synergies and extract operating costs to increase combined earnings per share."
[See also: Mergers gone wrong.]
3. Apax Partners acquired Kinetic Concepts. In July, Apax Partners acquired Kinetic Concepts Inc., a medical device company focusing on the design, manufacturing, marketing, and service of therapies and products for the wound care, tissue regeneration, and therapeutic support system markets. The transaction was valued at $6.3 billion, which included KCI's outstanding debt. In 2012, KCI reported revenues of $2.0 billion. "Over the years, we have reviewed multiple investments in the medical devices and products industry, having originally identified it as a key growth sector within our overall healthcare investment practice," said Buddy Gumina, partner and co-head at Apax. "Based on this experience, we possess a deep understanding of KCI's business and the markets in which the company operates."
4. Thermo Fisher acquired Phadia AB. In May, Thermo Fisher Scientific Inc. announced it signed a definitive agreement to acquire allergy and autoimmunity diagnostic company Phadia from European private equity firm Cinven. The transaction was completed in the fourth quarter of 2011 and was valued at approximately $3.5 billion. The acquisition of Phadia was said to be a "major step forward" for the company, aiding in its strategy to develop Thermo Fisher's global presence in specialty diagnostics. "This transaction will provide Thermo Fisher with leading allergy and autoimmunity diagnostic testing technologies that expand our specialty diagnostic offerings," said Marc Casper, president and CEO of Thermo Fisher. "From a market perspective, Phadia has significant growth opportunities in the large, under-penetrated U.S. market…"
[See also: Medical billing company MedData acquired MedDirect.]
5. Endo Pharmaceuticals acquired American Medical Systems. In April, Endo Pharmaceuticals announced it entered into a definitive agreement to acquire American Medical Systems (AMS), a provider of devices and therapies for male and female pelvic health, for $2.9 billion, which included the assumption and repayment of $312 million of AMS debt. The transaction was said to bring Endo "scale in its devices and services business segment," with the combination of AMS' and Endo's existing platforms providing additional solutions across the entire urology spectrum. Furthermore, the combined companies are estimated to have revenues of approximately $3 billion and EBITDA of $1 billion. "I believe that the two will be a great strategic fit, with AMS building on Endo's existing devices and services segment and allowing our management and employees to accelerate the growth of our business…," said Anthony Bihl, president and CEO of AMS.
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