Kinetic Concepts to Buy LifeCell for $1.7 billion

08 April 2008

Medical technology maker of advanced wound care and therapeutic support systems, Kinetic Concepts Inc, has entered in to a deal to acquire surgical tissue grafts and blood cell preservation products maker LifeCell Corp for $1.7 billion in cash, raised from a fully underwritten debt financing arrangement from Bank of America and J PMorgan Chase Bank.

Kinetic says it plans to expand into the market for surgical tissue- repair products through this acquisition..

The $51-a-share acquisition price is at an 18 per cent premium to LifeCell's closing price on 4 April and a 26-per cent premium over the 90-day volume weighted average trading price. 

The boards of the two companies have approved the deal and the companies expect it to "significantly" add to earnings by 2010, excluding amortisation of intangible assets. Based on existing KCI and LifeCell operations, the combined companies are expected to generate revenue of approximately $2 billion in 2008 and will employ more than 7,000.

"The acquisition of LifeCell provides additional long-term growth opportunities, benefiting patients and physicians and delivering sustained value to our shareholders,'' said Catherine Burzik, president and chief executive officer of KCI. ''This combination allows us to accelerate our strategy to increase KCI's presence in the operating room and will leverage our broad global market reach to drive future growth of LifeCell's products.''

Following the completion of the transaction, LifeCell will operate as a new global biosurgery division within KCI, headed by Paul Thomas as president of the division, who will also join KCI's executive committee.