Richmond, Va.-based Owens & Minor Inc. is purchasing Medical Action Industries Inc. of Brentwood, N.Y.
Medical Action makes custom procedure trays (CPTs) and minor procedure kits. The companies signed a definitive agreement under which Owens & Minor will acquire all outstanding shares of Medical Action for $13.80 per share in cash, representing a total transaction value of approximately $208 million, including assumed debt, net of cash. Medical Action reported $287.8 million in net sales from continuing operations for the fiscal year ended March 31 this year, of which approximately 45 percent represented sales to Owens & Minor.
"The acquisition of Medical Action is consistent with our strategic focus and a natural extension of Owens & Minor's core capabilities as we look to broaden our service offering," said Craig R. Smith, chairman and chief executive officer of Owens & Minor. "It meets the needs of both our provider and manufacturer customers by providing them a more complete and cost-effective solution for the delivery of procedure-specific product kits. With attractive margins and a strong competitive position, we expect this transaction to create value for shareholders and establish a scalable platform for future growth."
"We have a long and productive history working with Medical Action as their largest channel partner and understand the organization well," said James L. Bierman, president and chief operating officer of Owens & Minor. "We are confident in our ability to achieve identified synergies and in the enhanced value we can deliver together for patients, providers and manufacturers. Our two companies share similar cultures, and we look forward to welcoming the Medical Action employees to the Owens & Minor team as we build an industry leader."
According to Owens & Minor officials, the purchase will have the following benefits:
• Medical Action's tray assembly capabilities complement Owens & Minor's existing ability to provide unitized delivery services to the provider market. By assembling and delivering procedure-specific products to the point of care, Owens & Minor's unitized delivery services significantly improve the ability of provider customers to track, control and reduce procedure costs;
• Owens & Minor's leadership position in medical supply logistics coupled with Medical Action's dedicated clinical sales force creates opportunities for enhanced growth in the domestic kit and tray market;
• Medical Action's CPT strategy of providing product choice and flexibility for providers is complementary to Owens & Minor's logistics-focused supply chain services, where product choice is highly valued; and
• The acquisition enhances Owens & Minor's partnerships with manufacturers by providing continued market access and more robust opportunities to deliver their products directly to the patient through Owens & Minor's unitized services, officials said.
"Owens & Minor's position as a leading healthcare logistics company will be complemented by the talented Medical Action employees who provide quality products and solutions that improve patient outcomes," said Paul D. Meringolo, chief executive officer of Medical Action. "Our companies have enjoyed a highly collaborative relationship for over thirty-five years, are built around similar cultures and values and are respected throughout the healthcare community. This transaction represents an excellent outcome for stockholders, employees and customers, who will benefit from the reputation, expertise and knowledge provided by the combined companies."
The transaction, which has been approved by the boards of directors of both companies after an auction process, is subject to customary closing conditions, including Medical Action shareholder approval and regulatory clearances, and is expected to close in the fourth quarter of 2014.
Owens & Minor is a healthcare logistics company, providing services across the spectrum of medical products from disposable medical supplies to devices and implants. Owens & Minor has annual revenues exceeding $9 billion.
Medical Action's products are marketed primarily to acute care facilities in domestic and international markets. The company has expanded its target market to include physician, dental and veterinary office, out-patient surgery centers, long-term care facilities and laboratories.