Angiotech to acquire American Medical Instruments for $785 million

By E. Janene Geiss

Philadelphia, Feb. 1 - Angiotech Pharmaceuticals, Inc. announced Wednesday that it has entered into a definitive agreement to acquire privately held American Medical Instruments Holdings, Inc., a leading independent manufacturer of specialty, single-use medical devices, for about $785 million in cash.

The transaction provides Angiotech with a commercial platform to capitalize on its current product pipeline, supporting a wide range of specialty therapeutic areas, according to a company news release.

The acquisition also significantly diversifies Angiotech's revenue base and gives the company global manufacturing, marketing and sales capabilities, officials said.

The transaction, which is anticipated to close in the second quarter of 2006, is expected to be immediately accretive to Angiotech's 2006 and 2007 results.

American Medical has global operations in 12 locations and four countries, including more than 550,000 square feet of modern manufacturing operations.

Post transaction, Angiotech will have two specialty sales forces operating on a worldwide basis; one focused primarily on general surgery, plastic surgery and ophthalmic surgery and the second focused on vascular surgery, interventional radiology and tumor biopsy, officials said.

"The acquisition of American Medical Instruments represents a transformational event for Angiotech. The convergence of Angiotech's exceptional research and development efforts and AMI's expertise in operations, manufacturing and sales uniquely positions the combined company to develop and commercialize the next generation of medical devices and combination products," William L. Hunter, president and chief executive officer of Angiotech, said in the release.

American Medical's revenues are estimated to be about $174 million for the year ended Dec. 31, which represents about 46% of the estimated combined 2005 revenues of the two companies.

Angiotech said it anticipates the transaction will be immediately accretive to its 2006 adjusted earnings per share.

For 2007, the first full fiscal year of combined operations, Angiotech said it expects meaningful accretion in adjusted earnings per share, driven by underlying growth in American Medical earnings and synergy realization.

Term loan secured

Angiotech said it has secured $600 million in fully committed term loan facilities to finance the transaction and expects to fund the acquisition through a combination of these or other debt financings and the contribution of about $200 million of existing cash on hand.

Following the transaction, Angiotech said its pro forma balance sheet will remain strong with about $160 million remaining cash on hand and manageable levels of debt as compared to pro forma EBITDA and free cash flow.

Following the close of the transaction, American Medical Instruments will become a newly created division of Angiotech, with operations in Illinois, Pennsylvania, New York, Florida, Denmark and the United Kingdom - and will consist of three specific operating business units: Surgical Specialties, InterV and an OEM division.

"There is no overlap between our two organizations and our skills and expertise are the perfect complement to AMI's core strengths. We have long respected the AMI team and what they have accomplished. We welcome American Medical's employees to Angiotech and look forward to their active participation in our continued success," Hunter said in the release.

Merrill Lynch & Co. is financial adviser and Sullivan & Cromwell LLP is legal counsel to Angiotech. Credit Suisse and Merrill Lynch have provided the necessary financing commitments to complete the transaction.

Angiotech is a Vancouver, B.C., specialty pharmaceutical company that discovers and develops treatments for diseases or complications associated with medical device implants, surgical interventions and acute injury or trauma.

American Medical Instruments, bases in Dartmouth, Mass., is an independent manufacturer of a variety of single-use medical device products for specialty areas such as vascular surgery, interventional radiology, general surgery, wound closure and minimally invasive cosmetic surgery.

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