MURRAY HILL, N.J.—C.R. Bard Inc. has agreed to acquire Rochester Medical Inc. in an all-cash offer of approximately $262 million, or $20 per share. The deal is expected to close in the fourth quarter of 2013.
The transaction is structured as a merger and has been signed off on by each company's board of directors. The deal still is pending regulatory approval and must be OK'd by Rochester Medical shareholders.
“Our primary focus is to shift the mix of the portfolio to faster, sustainable revenue growth, doing that both through organic investments and through our business development activity,” Bard CEO Tim Ring said during a conference call announcing the acquisition.
“We believe each of these acquisitions gives us an opportunity for product leadership in sizable markets that have the potential to grow double digits for a number of years.”
Rochester Medical is a developer of silicone urinary incontinence and urine drainage products. CEO Anthony Conway said the agreement represents an attractive valuation for Rochester Medical shareholders and represents a great opportunity for the combined companies to create a broad product portfolio by offering a more comprehensive range of high-quality urological and continence care products.
Chris Holland, Bard chief financial officer, said the acquisition greatly enhances the firm's position in the global urology homecare market. According to Holland, the purchase opens a new market for Bard, male external catheters. He estimates the market to be worth about $130 million and said Rochester already has established a product leadership position.
“This transaction represents a compelling strategic fit for our global urological drainage franchise and a significant step for us toward the development of a global home health platform,” Holland said. “Rochester's products fill or augment key technology and competitive gaps in our urology portfolio.”
Holland said Rochester improves Bard's access to the intermittent self catheters market. The company estimates the market is worth roughly $800 million today and projects it will grow to $1.1 billion by 2020. Bard has about 5 percent of this market with a very limited product set, but Holland expects that to grow as Rochester's broader product line is integrated into the company.
One such intermittent catheter is Rochester's Magic 3, designed with technology composite of three distinct all-silicone layers that independently addresses an attribute required for intermittent catheterization. According to Roches-ter's website, the catheter is gentle on sensitive tissue, provides optimal handling and easy insertion.
“We believe Rochester's Magic 3 is clinically one of the best,” Holland said. “They are in the very early days of market penetration with this product, so we see significant opportunity ahead if we combine their technology and know-how with our operations and established reputation in urology.”
Rochester will increase Bard's sales presence. The company goes from having six representatives in the U.S. calling primarily on durable medical equipment customers to 26 calling on durable medical equipment customers, specialty distributors and urology practices.
In the United Kingdom, Bard increases from 16 representatives and one nurse to 24 reps and 12 nurses. Rochester also owns and operates a dispensing appliance contractor in the U.K., giving Bard direct access to customers. Holland expects growth in other geographic areas as well.
The acquisition of Rochester Medical is the third Bard purchase in three months. Bard reached an agreement in August to acquire Medafor Inc. for $200 million at closing, along with future contingent payments up to an additional $80 million. The transaction is expected to close this year.
Bard's buyout of Loma Vista Medical Inc. closed at the end of August, a company spokesman said.
“We're entering new spaces with faster revenue growth,” Ring said. “The acquisitions provide us access to markets with long-term opportunity.”