Healthcare Sector Comment – December 2014

Dato

One trend within the healthcare market that doesn’t seem to be subsiding is the activity of US corporates using acquisitions to move their headquarters to countries with lower corporate tax rates – dubbed “tax inversion”.

Earlier this year, in our July sector comment, we talked about the announcement that Medtronic Inc. would acquire Ireland-based Covidien plc, and now, after months of speculation, Stryker Corp, the US-based medical devices supplier, is reportedly ready to make a €13bn bid for UK listed rival Smith & Nephew plc (S&N). S&N is a medical technology company with leadership positions in the areas of orthopaedic reconstruction, advanced wound management, sports medicine and trauma extremities & fixation. It has also been announced, in another attempt at tax inversion, that US listed medical technology company Steris Corp will buy British sterilisation services provider Synergy Health plc for an estimated €1.7bn. The acquisition by Steris will allow the company to move its tax domicile to the UK, thus benefitting from a lower tax rate of 21%.

The US Treasury has recently intervened to curb tax inversions but the attraction of quality acquisition targets and a reduced tax liability is compelling. So, will we see more? Watch this space…

 

Health & Social Care Deals

Monarch Alternative Capital, the US-based debt investment firm, acquired Executive Care Group for an undisclosed amount. Executive Care Group, based in the UK, operates 25 care homes (mostly in the North East of England) that provide elderly, nursing and dementia care services.

UK property fund manager Legal & General Property acquired three care homes from the CarePlaces Fund, the specialist healthcare property fund managed by Bridges Ventures in partnership with care home developer Castleoak, for a consideration of €31.7m.

Health Care REIT-backed Gracewell Healthcare acquired an 88-bed care home from Executive Care Group for a consideration of €13.6m. Gracewell is a UK-based care home operator.

Kerala Institute of Medical Sciences (KIMS) acquired a majority stake in Al Shifa Hospital, an Indian tertiary care hospital operator. KIMS is a leading tertiary care hospital based in India, backed by PE firms OrbiMed and Ascent Capital.

Golden House, an Israel-based elderly residential care home operator, and Ravad, an Israel-based real estate investment company, acquired UK-based residential and nursing home operator St Cloud Care for a consideration of approximately €40.2m.

Sweden-based private equity firm Adelis Equity Partners acquired Med Group Oy, the Finland-based healthcare company providing public paramedic services, international medical evacuations and travellers’ medical services, for an undisclosed amount.

UK private equity firm Sovereign Capital backed portfolio company Eden Futures in their acquisition of Supported Homes, for an undisclosed amount. Supported Homes operates eight homes that provide care to people who have enduring mental health needs.

Assura Group Ltd acquired UK-based Metro MRI, which owns 11 medical centres, for a consideration of €79.3m. Assura is a UK-based specialist healthcare property company.

HIG Capital’s portfolio company, US-based Surgery Partners, acquired Symbion Holdings Corporation, a US-based short stay surgical hospitals and ambulatory surgery centres operator, for a consideration of €636.1m. Surgery Partners manages, develops and acquires ambulatory surgery centres (ASCs).

Target Healthcare REIT completed the acquisition of three care homes (based in Yorkshire and Lancashire, UK) from Clerical Medical for a consideration of €16.7m.

 

Pharma & Biotech Deals

Benchworks Inc. acquired US-based pharmaceutical drug wholesaler Safe Chain Solutions LLC for an undisclosed amount. Benchworks is a marketing services firm based in the US.

Allegiance Equity Corporation acquired CGX Life Sciences Inc. (CGX), a US-based nutraceutical manufacturer, for a consideration of €0.7m. Allegiance is a Canada-based company that develops unique treatments for common illnesses and health complications.

Recipharm AB acquired Lusomedicamenta Sociedade Técnica Farmacêutica SA, the Portugal-based pharmaceuticals manufacturer, for a consideration of €112.9m. Recipharm is a Sweden-based pharmaceutical company.

Consort Medical plc acquired Aesica Holdco Ltd, a UK-based pharmaceutical products manufacturer, for a consideration of  €152.1m. Consort is a UK healthcare company focused on medical technologies.

US-based pharmaceutical company AMAG Pharmaceuticals Inc. acquired Lumara Health Inc., a US-based speciality pharmaceutical company dedicated to advancing women’s health, for a consideration of €807.7m.

Valeant Canada, part of Valeant Pharmaceuticals, acquired Croma Pharma Canada Ltd, a Canada-based pharmaceutical manufacturer, for an undisclosed amount.

German chemical and pharmaceutical company Bayer AG acquired Dihon Pharmaceutical Group Co. Ltd, a China-based pharmaceutical manufacturer, for a consideration of €424m.

 

Medical Equipment & Supplies Deals

Lohmann & Rauscher International GmbH, a German supplier of medical devices and hygiene products, acquired Solaris Inc., a US-based medical garments manufacturer, for an undisclosed amount.

US manufacturer of technical ceramics Coors Tek Inc. acquired Nanosurfaces Industries srl, an Italy-based orthopaedic equipment manufacturer, for an undisclosed amount.

Abaxis Inc. acquired Quality Clinical Reagents Ltd and Trio Diagnostics Ltd, the UK-based veterinary laboratory instruments wholesalers, for an undisclosed amount. Abaxis is a US-based medical products company that manufactures point-of-care instruments and consumables for the medical, research and veterinary market.

LBO France along with Naxicap Partners, BNP Paribas Développement SA, SCR and CM-CIC Capital Finance SA, the France-based private equity and venture capital firms, acquired FH Orthopedics, the France-based manufacturer of orthopaedic implants, for an undisclosed amount.

Valeant Pharmaceuticals International Inc., the listed Canada-based pharmaceutical company engaged in the developing, manufacturing and commercialising of pharmaceutical drugs, acquired Nicox Inc. for a consideration of €15.6m. Nicox is a US-based ophthalmic diagnostic medical device manufacturer.

New State Capital Partners LLC, a US private investment firm, acquired United Medical Systems Inc. (UMS), a provider of mobile medical equipment and services for use in urology and other market segments, for an undisclosed amount.

Ranir LLC, the US-based oral and personal healthcare products manufacturer, acquired Oralys Dental SAS, the France-based manual toothbrush manufacturer, for an undisclosed amount.

Sigma-Aldrich Corporation acquired Cell Marque Corporation, a US-based antibody reagents and kits developer, for an undisclosed amount. Sigma-Aldrich is a US manufacturer and wholesaler of biochemical and organic chemicals.

Cantel Medical Corp acquired International Medical Services srl (IMS), the Italy-based company engaged in the research, development and manufacturing of goods for the disinfections and sterilisation market segment, for a consideration of €19.6m. Cantel is a listed US-based healthcare company manufacturing infection prevention and control products.