Globus Medical acquires device manufacturer — 5 key notes

Written by Laura Dyrda | February 26, 2015 | Print  |

Globus Medical acquired Branch Medical Group, a third party manufacturer of high precision medical devices.

"We are very excited by the vertical integration opportunity afforded by BMG to strengthen Globus, both operationally and financially. BMG is an extremly efficient organization; driven by their "Right, On Time" credo to produce high quality, precision medical devices," said Globus President and CEO Dave Demski. "The potential to expand the amount of products manufactured by BMG in the future represents a significant opportunity for Globus, and, at the acquisition price, is a compelling values."


Here are five key notes on the acquisition:


1. Globus Medical will pay $52.9 million in cash for BMG on a cash-free, debt-free basis.


2. The acquisition is expected to close in March 2015 after the companies satisfy closing conditions.


3. Globus expects the acquisition will be neutral to 2015 earnings since the benefit from reduced costs of manufactured parts is delayed as Globus' current inventory levels are depleted and will be offset by expected investments to increase BMG's manufacturing capacity.


4. BMG employs more than 100 people in an Audubon, Pa.-based facility. Sales were $24.4 million last year, on which they earned around $91 million in adjusted EBITDA.


5. Before the acquisition, BMG was Globus's top supplier, producing the company's most complex parts efficiently.


"The close working relationship we have enjoyed over the years has enabled us to work together to get products to the market quickly," said Globus Senior VP of Product Development Andy Iott. "The ability for enhanced collaboration between Globus engineers and BMG manufacturing professionals in the future is an added benefit to the transaction."


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