Dive Brief:
- Surmodics, a maker of medical device coatings and diagnostics components, has agreed to sell to a private equity firm for approximately $627 million.
- GTCR will acquire the company for $43 per share, or roughly a 41% premium on Surmodics’ volume-weighted average closing price for the 30 days through Tuesday. Surmodics, which announced the deal on Wednesday, will go private when the transaction closes.
- Needham analysts wrote in a note to investors that the deal fairly values Surmodics and they do not expect a higher offer or antitrust issues. Surmodics forecast the deal to close in the second half of 2024.
Dive Insight:
Surmodics specializes in developing components for in vitro diagnostic products and surface technologies for medical devices, such as coatings to limit friction when catheters move through the body and drug-delivery coatings.
The company reported revenue of about $32 million in its fiscal second quarter, which ended March 31, compared with $27.2 million in the year-ago period. As of March 31, Surmodics had $33 million in cash and cash equivalents, down by more than $8 million since the end of September.
CEO Gary Maharaj said in the deal announcement that “GTCR is an ideal partner for Surmodics, given its extensive history and deep domain expertise in the Healthcare sector.”
Needham analysts said it makes more sense for a private equity firm to buy Surmodics, as the company generates more than 29% of its sales from coatings sold to other device firms.
They added that while GTCR has an investment in Biocoat, which also develops coatings for medical devices, the two companies could be combined to save costs. Their “coatings market shares are low enough to prevent antitrust issues,” the analysts wrote.
Surmodics’ board of directors unanimously approved the transaction, according to the announcement. The company’s shareholders still need to OK the deal.