Cynosure to Takeover Palomar - Analyst Blog
26 Março 2013 - 2:29PM
Zacks
Recently, Cynosure, Inc. (CYNO), a developer of
aesthetic treatment systems, entered into a definitive acquisition
agreement with Palomar Medical Technologies Inc.
(PMTI), in which the former is going to take over the latter for
$294 million in cash and stock.
Cynosure, which is looking forward to this acquisition, expects
the inclusion of Palomar to be a strategic fit as the inclusion of
Palomar will complement the company’s existing product line and
enhance Cynosure’s customer base.
Accordingly, Cynosure expects the acquisition to further bolster
the company’s sales and strengthen its worldwide distribution
network. The acquisition will also add more than 40 patents in
Cynosure’s portfolio, thereby boosting its intellectual property
position.
As per the terms of the deal, Cynosure will issue 5.2 million
shares and fund the cash of $147 million through existing cash
balance. The company will be acquiring Palomar for $13.65 a share
($6.825 will be provided in cash and the balance through common
stock).
We note the acquisition price reflects a a premium of 23% and
34% on Palomar’s average closing price and average enterprise
value, respectively, since the announcement of Palomar's fiscal
2012 results (on Feb 7, 2013).,
Cynosure expects this acquisition to be accretive to its 2014
performance with the implementation of project synergies in the
range of $8 million and $10 million by 2014. Post-acquisition, the
cash balance of the company is expected to be around $87 million
and it will remain debt-free.
These figures are calculated on an adjusted basis as of Dec 31,
2012. The board of directors of both the companies voted
unanimously and the deal is expected to be completed by end of
third quarter 2013.
Palomar has created a global footprint by producing products
like Icon and Starlux laser and Intense Pulsed Light (IPL). Its
recently introduced product Vectus Diode Laser has proved Palomar’s
worldwide excellence. Palomar is dedicated toward improving patient
care which is reflected in its products, with features like skin
cooling, temperature control and energy delivery.
Currently, on a combined basis, Cynosure and Palomar have a
large installed base of over 20,000 aesthetic laser systems with a
distribution network across more than 100 countries worldwide. The
collective revenue for both the companies in fiscal 2012 was $234
million of which 52% is attributable to North America while the
rest came from the international markets.
Cynosure develops and sells non-invasive and minimal invasive
products to rejuvenate skin, treat vascular and benign pigmented
lesions, reduce cellulite, remove hair and treat onychomycosis. The
company sells products in North America and international
markets.
Earlier, in 2006, Cynosure had entered into a cross-agreement
with Palomar under which Cynosure had the rights to sell Palomar
products and in return royalty ranging 3.75%− 7.5% of net sales for
Palomar.
Currently, Cynosure carries a Zacks Rank #3 (Hold). However, we
are more positive about other stocks such as Rofin-Sinar
Technologies Inc. (RSTI), Cutera, Inc.
(CUTR) all of which carry a Zacks Rank #2 (Buy) and are expected to
do well.
CUTERA INC (CUTR): Free Stock Analysis Report
CYNOSURE INC-A (CYNO): Free Stock Analysis Report
PALOMAR MED TEC (PMTI): Free Stock Analysis Report
ROFIN-SINAR (RSTI): Free Stock Analysis Report
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