Teleflex plans to acquire Arrow International in an all-cash transaction valued at approximately $2 billion. "With the execution of this merger agreement, Teleflex is redefining its portfolio and its medical segment by creating a $1.4-billion medical technology business that will be the largest source of the company's revenues and profitability," says Jeffrey P. Black, chairman of the board and CEO of Teleflex.
Teflex reports that it will pay $45.50 per share, representing a premium of 20.40% over Arrow's closing price on July 20. Arrow today opened trading at $44.20.
"The merger of Teleflex and Arrow will establish Teleflex Medical as a leading global medical technology business with a specialization in disposable products for critical care, specialty medicine, and surgical applications focused on patient safety, infection control, and less invasive access,” adds Black. “Arrow will add an established position in catheter-based products for critical and cardiac care with many of the most well-respected brands in the industry, and a history of growth through innovation and global sales channels that complement the Teleflex medical portfolio of disposable medical devices for respiratory care, anesthesia, urology, and surgery."
The company expects synergies from the transaction could reach $70 to $75 million by fiscal year 2010. "With the addition of Arrow, we expect that by fiscal 2008 the Medical Segment should achieve annual revenues of approximately $1.5 billion and generate operating margins in the 20 percent range,” according to Black. “We expect the transaction to be meaningfully accretive to Teleflex's earnings by 2009."