Syneron Medical Ltd. (Nasdaq: ELOS) of Yokne'am, which is traded on Nasdaq at a market cap of $268 million, announced today that it was buying a US competitor, Candela Corporation (Nasdaq:CLZR), for $65 million in stock. Syneron said that "this strategic combination will create a global leader in medical aesthetic devices." The transaction is expected to be completed by the end of 2009.
Syneron, which was founded by its chairman Dr. Shimon Eckhouse, has developed various aesthetic medical devices for hair removal, and acne and cellulite treatment. Candela, which has a market cap of $43 million, is active in the same fields as Syneron.
According to the announcement, Candela shareholders will receive 0.2911 ordinary shares of Syneron for each share of Candela common stock they own. On the basis of the closing stock price of Syneron common stock on September 8, this represents $2.84 per share, or a total consideration of approximately $65 million. The consideration represents a premium of approximately 51% over the closing stock price of Candela on September 8. Candela's share price has risen 284% so far this year.
This is Syneron's first acquisition, but it will not reduce its cash pile, which was worth $214 million at the end of the second quarter. Fabian Tenenbaum, Syneron’s Chief Financial Officer, explained to "Globes" that a stock transaction was tax free for Candela's shareholders, and they therefore preferred it. He said that although it looked as though this was a matter of two companies in the same markets, this was not in fact the case. "Candela and Syneron are two different companies in terms of their existing customer bases and their international deployment," he said. "The overlap between them is therefore fairly small."
Globes: The timing of the acquisition is not surprising. Syneron has been suffering from a decline in its US activity, while Candela put itself up for sale a year ago.
"True. There's no doubt that this is a propitious moment, because the aesthetic medical device market has suffered badly from the global recession, and in a situation like that companies concentrate of improving operational efficiency and consolidation. So it's the right time for us to make this acquisition."
The new company will have proforma annualized revenue totaling over $180 million, based on the quarter ended June 30, 2009, ranking it among the leading medical aesthetic device companies in the industry, Syneron's announcement said. . The combined company will have approximately 62% of revenue generated from outside the US
Syneron will maintain its corporate headquarters in Israel and North American office in Irvine, CA. Candela will operate as a wholly-owned subsidiary of Syneron and maintain their offices in Wayland, MA, as well as subsidiary operations in Australia, France, Germany, Italy, Japan, Portugal, Spain and the United Kingdom.
Louis P. Scafuri will remain Chief Executive Officer of the combined company and Dr. Shimon Eckhouse will remain chairman.
Published by Globes [online], Israel business news - www.globes.co.il - on September 9, 2009
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