West Palm Beach, FL — Medical device maker AngioDynamics Inc. (NASDAQ: ANGO) said Tuesday it is purchasing one of The ComVest Group’s portfolio companies, oncology products maker Rita Medical Systems Inc. (NASDAQ: RITA) for about $220 million, plus approximately $3.3 million in assumed debt.
Rita shareholders will receive cash and stock totaling $4.70 per share, based on the assumption that Angiodynamics’ average 10-day closing stock price three days prior to shareholder meetings will range between $18.18 and $27.29 per share. Following the merger, Rita shareholders will own a 34.5 percent stake in the combined company. The purchase price represents a 19 percent premium to Rita’s Monday closing stock price of $3.95 on the Nasdaq, where the stock has ranged between $3.06 and $4.65 over the past year. The stock jumped 43 cents, or 10.9 percent, to $4.38 on the news, nearing its 52-week peak of $4.65.
Based in Fremont, Calif., Rita makes a system consisting of a radiofrequency energy generator and disposable accessories that is used in minimally invasive or laparoscopic procedures to superheat and kill tumors. The system is approved to treat liver cancer and is sold in Asia, Europe and the U.S. The company, which has about 221 workers, posted sales of $46.4 million in 2005.
AngioDynamics said the transaction, excluding one-time charges, is expected to be neutral to fiscal 2007 earnings and will add about 5 cents per share to fiscal 2008 net income. AngioDynamics’ board will include three Rita members after the transaction is complete.
The deal is seen closing by the end of the first quarter of 2007, subject to regulatory review, shareholder approval and other customary closing conditions. Angiodynamics expects the merger to eliminate $9 million of annual costs related to corporate and tradeshow expenses.
“Rita’s talented 33-person U.S. sales force targets the same customer base as does AngioDynamics’ 52-person U.S. sales force and the companies have virtually no product overlap,” said Eamonn P. Hobbs, president and CEO of AngioDynamics. “Rita has a very strong position in vascular access ports, which are an ideal sales fit with our Morpheus CT PICC and the vascular access port technology we purchased from Medron last May.”
Angiodynamics said the current Rita sales organization will remain intact after the merger closes. AngioDynamics’ sales force will take on responsibility for Rita’s specialty access catheter business, and leverage Rita’s 10-person direct sales force in Britain, Germany and France to sell AngioDynamics’ products.
Angiodynamics, which makes medical devices to treat non-cardiac vascular diseases, has about 300 employees and recorded 2006 sales of $78.4 million.
AngioDynamics, Inc. engages in the design, development, manufacture, and marketing of therapeutic and diagnostic devices to treat peripheral vascular disease and other noncoronary diseases in the United States, Europe, and Japan. Its products include angiographic products and accessories, including angiographic catheters, and uncoated, Teflon-coated, and hydrophilic-coated guidewires to support its angiographic catheter line; dialysis products, including catheters that provide short- and long-term vascular access for dialysis patients; vascular access products; and venous products used in endovascular laser procedures to treat venous insufficiency of the great saphenous vein and Sotradecol, a sclerosing drug. The company also offers thrombolytic catheters that are used to deliver thrombolytic agents, which are drugs that dissolve blood clots in hemodialysis access grafts, arteries, veins, and surgical bypass grafts; percutaneous transluminal angioplasty dilation balloon catheters; intra-vascular devices to measure blood flow in dialysis access sites during an access site clearing procedure; and drainage catheters. The company’s products are used by interventional radiologists and other physicians for the minimally invasive, image-guided procedures. For more information on Angiodynamics, visit www.angiodynamics.com.
About RITA Medical Systems
RITA Medical Systems, Inc., a diversified medical device oncology company, engages in the development, manufacture, and marketing of products that use radiofrequency energy to treat patients with cancerous or benign tumors. It offers radiofrequency ablation systems (RFA) for treating cancerous tumors, as well as percutaneous vascular ports and specialty access catheters (SAC). Its SAC products include implantable infusion ports for the delivery of systemic chemotherapy, implantable ports, hemodialysis catheters, needle infusion sets, peripherally inserted central venous catheters, other accessories used in vascular procedures, tunneled central venous catheters, safety needles, PICC lines, dialysis catheters, and specialty catheters for the stem cell transplant procedure. It also distributes a radiofrequency product, the HABIB 4X resection device, which is designed to limit blood loss in surgical resection procedures. The RFA products include disposable devices and generators that are used for the liver cancer and the bone cancer market. Its customers include surgical oncologists, hepatobiliary surgeons, liver transplant surgeons, laparoscopists, and interventional radiologists, as well as patient referral sources, including colorectal surgeons, radiation oncologists, and medical oncologists. It markets its products through a direct sales force and distributors in the United States, and through distribution partners in Europe and Asia. For more information on RITA Medical, visit www.ritamedical.com.
The ComVest Group is a Leading Private Equity Firm focused on investing in middle-market companies. Since 1988 ComVest has invested more than $2 billion of equity capital in over 200 public and private companies worldwide. Through our extensive financial resources and broad network of industry experts, we are able to offer our companies total financial sponsorship, critical strategic support, and business development assistance. Our focus is centered on building industry leading companies and creating long term value for equity holders. For more information on ComVest, visit www.comvest.com.