Just after the release of the third quarter results, Merit Medical Systems, Inc. (NASDAQ: MMSI) announced an asset purchase agreement with two of its competitors. Merit has made two other similar acquisitions in 2017.
The company entered into an asset purchase agreement with Becton, Dickinson and Company (NYSE: BDX) and C.R. Bard, Inc. (NYSE: BCR) to acquire various assets in relation to BD’s $24 billion acquisition of C.R. Bard, announced on April 23, 2017.
The acquired assets include soft tissue core needle biopsy products currently sold by BD under the trade names of Achieve™ Programmable Automatic Biopsy System, Temno™ Biopsy System and Tru-Cut™ Biopsy Needles, which are currently sold worldwide through a combination of a direct sales force and distribution partners; as well as the Aspira® Pleural Effusion Drainage Kits and the Aspira® Peritoneal Drainage System currently marketed by Bard, which are currently sold primarily in the United States.
Merit will pay $100 million for the assets, although the price is subject to adjustment for fluctuations in the value of transferred inventory. According to investor website Seeking Alpha, the two product lines will increase Merit’s revenues by about $45 million.
The purchase will be financed through borrowings which are currently available under its long-term credit facility.The purchase agreement also contains certain termination rights for both Merit and BD, and provides that, in connection with a termination of the purchase agreement, BD will reimburse certain transaction expenses of Merit up to $2 million.
Upon closing, Merit and BD intend to enter into various agreements to facilitate the transition of the acquired assets to Merit, including a transition services agreement, contract manufacturing agreement, distribution agreement and patent and know-how license agreement.