BioTelemetry jumps on $257M offer for Swiss rival
Adding LifeWatch would "dramatically accelerate" buyer's move beyond heart monitors
Shares of BioTelemetry, the Conshohocken-based wireless-heart-monitor developer, zoomed above $30 for the first time since 2008 after president and CEO Joseph Capper said the company would pay 260 million Swiss francs (about $257 million) for smaller Switzerland-based rival LifeWatch. Statement here
The deal would join competitors with "very similar products" for similar medical customers, Capper told investors in a conference call. BioTelemetry profits rose nearly 80 percent in 2016, to $24 million, on sales of $208 million. LifeWatch earned a small profit on sales of $114 million, after posting a loss in 2015.
The sale will enable the competitors to cut costs and boost profits, Capper said. BioTelemetry employs about 1,000; LifeWatch, about 600.
It's "too early" to say whether staff and back-office cuts would mostly happen in Conshohocken or at LifeWatch's main sites in Zug, Switzerland, or Rosemont, Ill., Capper said, after analyst Marco Rodriguez of Stonegate Capital Markets asked for cost-cutting details.
"We'll pull the best from both organizations [after] rationalizing the portfolio" and combining staff and products, Capper added.
The BioTelemetry-LifeWatch combination is not a done deal: "Other parties may jump in now," LifeWatch CEO Stephan Rietiker told Bloomberg LP after Capper announced the proposed union. Both gadget-makers and buyout firms have expressed interest, Rietiker said.
In his conference call, Capper noted that LifeWatch had been in joint marketing discussions with GE and other companies.
LifeWatch would "dramatically accelerate" BioTelemetry's plans to grow beyond heart monitoring into other specialities, Capper said. The price works out to about $27 a share, or a better than a 40 percent premium to LifeWatch's share price before the deal.
The merger should clear U.S. and Swiss competition regulators since the medical-devices industry is "fragmented" among many rivals, noted analyst Mitra Ramgopal, of Sidoti & Co., during the conference call.
The deal, if it happens, would be by far the largest for BioTelemetry (formerly known as CardioNet), eclipsing its $57 million purchase of PDSHeart Inc. in 2007.