C. R. Bard to Acquire Specialized Health Products

Safety medical products manufacturer Specialized Health Products International (SHPI) will be acquired by C.R. Bard for $68.4 million in cash, or $1.00 per share.

The price represents a premium of 20% based on the average closing price of SHPI over the last 30 days. The transaction price of $68.4 million is a 3.6 times multiple of SHPI’s 2007 revenues.

In 2007, revenues were $18.9 million, an increase of 43% over the $13.3 million in 2006. Revenues were bolstered by SHPI’s merger with Med-Design in June 2006. As part of that transaction, Med-Design shareholders received equity in SHPI equal to 33% of the combined company. Had that transaction closed on January 1, 2006, SHPI would have achieved an organic revenue growth rate of 26% in 2007.

Organic growth was largely driven by strong sales of the company’s safety needle products, particularly its Huber needle products. In November 2007, SHPI entered into an exclusive supply and distribution agreement with B. Braun Medical to distribute Huber needles worldwide under the Surecan and SafeStep brands.

Despite this progress, Jeff Soinski, President and CEO of SHPI, warned that, “We expect [SHPI’s] growth rate in 2008 to decline compared to 2007.”

Soinski believes the company has reached a point where “significant additional investment” will be required to build infrastructure and develop or acquire new product lines to continue 2007 growth rates.

C.R. Bard is well positioned to provide this additional investment. The $68 million purchase price is approximately .72% of the Bard’s $9.3 billion market capitalization.

The transaction remains subject to approval of SHPI shareholders. It appears everything will progress as planned; private equity firm of Galen Partners, which holds 22% of the SHPI shares, has given the merger a green light.

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