Merit Medical to Acquire Thomas Medical

Transaction Valued at Approximately $167M

November 27, 2012
Manufacturing Group
Assembly Materials Quality/Metrology People/Facilities

Officials at Merit Medical Systems Inc., a leading manufacturer and marketer of proprietary disposable devices used primarily in cardiology, radiology and endoscopy, announce they have entered into a stock purchase agreement to acquire Thomas Medical Products Inc. from GE Healthcare in an all-cash transaction valued at approximately $167 million, subject to customary post-closing adjustments.

Thomas Medical, based in Malvern, PA, designs and manufactures catheter-based vascular access delivery devices for diagnostic and therapeutic procedures in electrophysiology ("EP"), cardiac rhythm management ("CRM"), interventional cardiology and interventional radiology applications, primarily on an OEM basis. Merit believes Thomas Medical's products are recognized as "gold standard" by many of the leading CRM and EP market participants. Merit currently anticipates that during the year Thomas Medical will generate revenues of approximately $37 million and have gross and operating margins of approximately 55% and 44%, respectively, on a pro forma basis.

Merit intends to finance the full amount of the purchase price through the expansion of Merit's existing credit facility to $275 million, which Wells Fargo Bank has committed to provide in a single bank transaction. Merit expects the acquisition to be immediately accretive to its net earnings on a non-GAAP basis, adjusted for deal costs, one-time purchase accounting directives and amortization of intangibles. Furthermore, Merit has identified substantial growth and pull-through opportunities from the anticipated integration of Thomas Medical's products within its existing OEM business and capitalizing on its direct sales or dealer presence worldwide. Merit also expects it will be able to take advantage of tax benefits with approximately $43 million of net present value.

"We believe this transaction will help expand our market presence into new product categories, particularly in interventional cardiology," says Fred P. Lampropoulos, chairman and CEO of Merit. "A majority of cardiac rhythm access procedures utilize products of the nature manufactured by Thomas Medical. We believe substantial international expansion opportunities exist, especially in China, Japan, Russia and the Gulf States, as well as significant new product development opportunities based on know-how and existing intellectual property."

"In addition, Thomas Medical has a number of existing electrophysiology products that are distributed by the larger medical device companies, as well as other EP products being developed," Lampropoulos continues.
"We believe this segment of the business, which likewise represents potential expansion into new product categories, has the potential to be a driver of substantial future growth."