Smiths Group announced today that it has agreed to acquire the privately held US medical device company, Medex, a supplier of infusion equipment used in critical care.
“Medex is a first rate company, is an excellent strategic fit and we have secured it at a good price,” commented Keith Butler-Wheelhouse, chief executive of UK-based Smiths. “This transaction is a significant step in the continuing evolution of Smiths, and moves us into the medical devices big league.”
Smiths will pay the current owners of Medex $625 million in cash for the company’s equity, subject to any closing adjustment, and will assume some $300 million of net debt. One Equity Partners, an affiliate of JP Morgan Chase, owns 83.2% of the company, with the remainder held by management and employees. Completion, expected in the New Year, is subject to regulatory approval.
Medex specialises in intravenous infusion catheters which prevent needle-stick injuries. In a full year, the addition of Medex will increase the sales of Smiths Medical by around a third and profits by almost a half.
For the 12 months to 31 December 2004, Medex is expected to achieve sales of $330 million, underlying operating profit of $75 million and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $100 million. For the nine months to September, Medex reported underlying operating profit of $59 million and pre-tax profit of $39 million.
Commenting on the benefit of bringing Carlsbad, California-based Medex into Smiths Medical, Lawrence Kinet, board member for the division said: “This is a great opportunity for Smiths Medical. Annual sales will be approaching $1.25 billion, and we become more competitive by offering a wider range of products.
“We’ll have a greater presence in critical care, especially in safety devices, and we can use our global network to take the Medex range into new markets where we know there is strong demand.”