AngioDynamics to Acquire Navilyst Medical for $372M

AngioDynamics, a leading provider of innovative, minimally invasive medical devices for vascular access, surgery, peripheral vascular disease, and oncology, announced it has entered into a definitive agreement to acquire privately held Navilyst Medical in a transaction valued at $372 million based on yesterday's closing stock price of $14.20. Navilyst Medical is a global medical device company with particular strengths in the vascular access, interventional radiology, and interventional cardiology markets. Avista Capital Partners acquired the business from Boston Scientific in 2008, and it generated sales of $149 million in calendar 2011. The acquisition will significantly expand AngioDynamics' scale, doubling its share of the Vascular Access market while building critical mass in the peripheral vascular market. The transaction will be accretive to net sales growth, EBITDA margin, and earnings per share.

"The acquisition of Navilyst brings AngioDynamics scale, technology, and operational excellence," says Joseph DeVivo, president and CEO of AngioDynamics. "It strengthens AngioDynamics' current business by enabling us to focus on our key channels -- Vascular Access, Peripheral Vascular, and Oncology/Surgery -- and accelerates the ability of our global sales leaders to focus on key clinical call points. The combined company will offer a more compelling portfolio of products to our customers, allowing the sales force to be more productive and compete more effectively. At the same time, the acquisition creates an excellent platform for future revenue and earnings growth, as well as substantial cash flow generation leading to significantly increased value for our shareholders. Going forward, we will expand our geographic footprint and be in an even better position to accelerate our strong international sales growth from added scale and the power of the global NAMIC brand. I look forward to working with the excellent management team at Navilyst as we embark on this exciting opportunity for our organizations."

Transaction Benefits

• Scale
• Significantly increases AngioDynamics' presence in the Vascular Access market.
• Adds trusted NAMIC fluid management brand with leading global market presence to AngioDynamics' product offering. NAMIC provides entree for AngioDynamics' peripheral vascular portfolio in catheterization labs and with interventional cardiologists.

Technology

• BioFlo products utilize a novel technology that minimizes the accumulation of thrombus in vascular products such as PICCs, Ports and Dialysis Catheters. BioFlo PICC is approved for use in Canada and Europe and is pending U.S. FDA 510(k) market clearance.
• Patented PASV 3-way valve technology has a long clinical history in Ports and PICC's and is designed to automatically resist backflow.
• NAMIC has been the gold standard in fluid management in the cardiology catheter lab and interventional radiology office setting for more than 40 years.
• Automated power injector in development has potential for significant reductions in contrast usage and radiation exposure.

Operational Excellence

• World-class manufacturing and operations, which employ Lean and Six Sigma best practices, are based in Glens Falls, N.Y., within four miles of AngioDynamics' Queensbury, N.Y., facility.
• State-of-the-art Convenience Kitting platform provides customers fluid management and PICC products highly customized to their precise specifications.
• Vertically integrated injection molding capabilities enable efficient, high volume, tight tolerance production of most components.
• High-powered Oracle ERP system drives improved quality and customer satisfaction through integration of product, customer, quality, and regulatory information.
• High-caliber research and development facilities in Marlborough, MA.

Product Portfolio
The combined Company's Vascular Access business will offer a full line of ports, PICCs and other products differentiated by advanced technologies like the PASV valve and BioFlo from Navilyst, and Smart Port power-injectable ports featuring Vortex port technology from AngioDynamics. With NAMIC, AngioDynamics gains a foothold in the cardiology market, creating opportunities to drive Peripheral Vascular product sales and better serve these clinicians and their institutions. Additional growth will be brought by AngioDynamics' VenaCure EVLT laser varicose vein therapy. In Oncology/Surgery, AngioDynamics' growing radiofrequency ablation product lines and NanoKnife System will be augmented by microcatheters from Navilyst.

"The combination of Navilyst and AngioDynamics brings together two leading companies, with complementary strengths and assets," says David Burgstahler, partner and president of Avista Capital Partners. "The combination of our two companies will be a great strategic fit and will provide greater scale as well as a more comprehensive and competitive product portfolio. The combined company is poised to drive significant value for shareholders in the near- and long-term."

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Expected Financial Impact of the Transaction
Based on an expected closing in the fiscal fourth quarter of 2012, AngioDynamics expects the following financial impact of the transaction:

Net Sales

• Pro forma net sales of approximately $360 million in FY13.

Non-GAAP EBITDA

• Pro forma adjusted EBITDA of approximately $60 million in FY13, excluding transaction-related costs and non-recurring costs.

Net Cost Savings

• Net cost savings are expected to be approximately $5-7 million in FY13, excluding associated one-time costs, and increase to approximately $10-15 million on a run-rate basis over a 2-3 year period.

EPS

• Accretive to non-GAAP EPS by at least $0.08 per share in FY13, excluding transaction-related costs and non-recurring costs.

Tax Benefits

• Acquired tax assets will produce $11.5 million, or $0.32 per share, in annual cash tax savings each year from FY13 to FY23.
• Cumulative cash tax savings will amount to $130 million, or $3.65 per share, through FY24.
• On a present value basis, the acquired tax assets reduce the effective purchase price by approximately $80 million, to $292 million.

"We believe joining Navilyst with AngioDynamics will deliver immediate and longer term results for our customers and shareholders," says Joseph Gersuk, executive vice president and CFO of AngioDynamics. "We've diligently analyzed numerous opportunities to use our balance sheet to drive shareholder value and concluded Navilyst is the perfect partner to build a stronger and more profitable global medical device leader. With significant facilities in close proximity, we know their products and people well. Importantly, we have an integration plan in place and believe there are significant opportunities to deliver meaningful cost savings and strong financial results in fiscal 2013 and beyond."

Transaction Terms
Under the terms of the agreement, AngioDynamics will acquire Navilyst Medical from Avista Capital Partners, a private equity firm, for $372 million in cash and stock. AngioDynamics will fund the purchase price and related transaction costs using approximately $97 million of cash on hand and $150 million from a fully committed bank financing facility from J.P. Morgan, Bank of America, and KeyBank National Association in the form of new debt issuance and the issuance of common stock.

AngioDynamics will issue approximately 9.5 million shares of common stock to Avista Capital Partners and have total fully diluted shares outstanding of approximately 35.1 million shares upon the transaction's closing. Avista will hold approximately 27 percent of the outstanding common stock and will receive two additional seats on AngioDynamics' existing Board of Directors. The Board of Directors of both companies have unanimously approved the proposed transaction, which is expected to close during the Company's fiscal 2012 fourth quarter ending May 31, 2012, and is subject to customary closing conditions, clearance under certain antitrust guidelines and the approval of AngioDynamics' shareholders.

Upon closing, AngioDynamics expects to have at least $50 million in cash and liquid investments, $150 million in debt and a $50 million revolving credit facility with the aforementioned banks.