Strategically more than the sum of the parts
AorTech have announced the proposed acquisition of the partner in their vascular business, RUA Medical Devices Ltd, for £2.45m. RUA Medical is a stand-alone cash-generative, medical device and development company.The cash element of the acquisition is funded from existing resources and the stock element at £1 is a premium of 34% to the last closing price. RUA’s cost equates to 1.5x FY 2019 sales and 8.5 times EBITDA. Subject to shareholder approval, the deal should close post financial year-end and not affect our FY2020 estimates.
To us, this seems a strategically sensible move as the transaction has a number of positive attributes:
• it would transform AorTech from a virtual business into a fully formed ISO-accredited, FDA authorised medical device manufacturer.
• RUA is cash generative in its own right, with revenues that have grown from £0.6m in 2013 to £1.6m in the year to April 2019.
• The full internalisation of the Vascular business will double AorTech’s margin when the products are commercialised.
Upon completion our fair value would change slightly to £101.2m or 689p/share (previously £99.2m or 676p/share) on a pro forma basis that takes account of the additional shares issued.
Abbott Laboratories is engaged in the discovery, development, manufacture, and sale of a range of health care products. The company's reportable segments are: established pharmaceutical products, which includes a range of generic pharmaceuticals; diagnostic products, which includes a range of diagnostic systems and tests; nutritional products, which includes a range of pediatric and adult nutritional products; and medical devices, which includes a range of rhythm management, electrophysiology, heart failure, vascular and structural heart devices for the treatment of cardiovascular diseases, and diabetes care products for people with diabetes, as well as neuromodulation devices.
Boston Scientific develops, manufactures and markets medical devices. The company's Medical Surgical segment consist of: Endoscopy, which develops and manufactures devices to diagnose and treat a range of gastrointestinal and pulmonary conditions; and Urology and Pelvic Health, which develops and manufactures devices to treat various urological and pelvic conditions. The company's Rhythm and Neuro segment includes: Cardiac Rhythm Management, which develops and manufactures implantable devices to treat cardiac abnormalities; and Electrophysiology, which develops and manufactures medical technologies used in the diagnosis and treatment of rate and rhythm disorders of the heart.
Edwards Lifesciences is engaged in patient-focused medical for structural heart disease, as well as critical care and surgical monitoring. The company is a manufacturer of heart valve systems and repair products used to replace or repair a patient's diseased or defective heart valve. The company is also engaged in hemodynamic and noninvasive brain and tissue oxygenation monitoring systems used to measure a patient's cardiovascular function in the hospital setting. The company's products and technologies are categorized into four main areas: Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid Therapies, Surgical Structural Heart, and Critical Care.
Aortech International is an Intellectual Property (IP) holding company whose principal activity is exploiting the value of its IP and know-how.
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