Landauer acquired by Fortive: fairness opinion by Lazard
Deal terms
Implied value per share by method vs. $67.25 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Lazard to the target board
Discounted cash flow assumptions
Present value as of June 30, 2017; implied enterprise value range $509-$664 million; net debt subtracted and divided by fully diluted shares (approximately 9.8 million). Terminal value assumed 3.0% revenue growth and constant Adjusted EBITDA margin.
Selected public companies (10)
Accuray Incorporated · Analogic Corporation · CONMED Corporation · Haemonetics Corporation · Halyard Health, Inc. · ICU Medical, Inc. · Merit Medical Systems, Inc. · Natus Medical Incorporated · Omnicell, Inc. · OSI Systems, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / 2017E Adjusted EBITDA | 10.4x | — | 20.0x | 10.5x–13.5x | $37.98–$50.42 |
| EV / 2018E Adjusted EBITDA | 9.6x | — | 17.4x | 9.5x–12.5x | $34.58–$47.25 |
| Average of 2017E and 2018E Adjusted EBITDA multiple ranges (blended) | — | — | — | — | $36.28–$48.84 |
Selected precedent transactions (11)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2017-04-17 | MOCON, Inc. | AMETEK, Inc. | — |
| 2017-02-14 | Cynosure, Inc. | Hologic, Inc. | — |
| 2016-02-23 | Newport Corporation | MKS Instruments, Inc. | — |
| 2015-08-27 | Lake Region Medical Holdings, Inc. | Greatbatch, Inc. | — |
| 2015-06-17 | Welch Allyn Holdings Inc. | Hill-Rom Holdings, Inc. | — |
| 2014-03-28 | Nordion Inc. | Sterigenics International LLC | — |
| 2013-12-08 | Given Imaging Ltd. | Covidien plc | — |
| 2013-12-04 | Pulsion Medical Systems SE | Getinge Group | — |
| 2012-12-04 | Young Innovations, Inc. | Linden Capital Partners | — |
| 2012-07-06 | One Lambda Inc. | Thermo Fisher Scientific Inc. | — |
| 2010-12-13 | Dionex Corporation | Thermo Fisher Scientific Inc. | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM EBITDA (LTM ended June 30, 2017 Adjusted EBITDA) | 8.7x | 12.1x | 27.0x | 10.0x–15.0x | $38.60–$60.68 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| 52-Week High/Low Trading Prices | Intraday share price of Company Common Stock over the 52 weeks ended September 1, 2017 ranged from $41.00 to $63.00, versus consideration of $67.25. | $41.00–$63.00 |
| Research Analyst Price Targets | Published Wall Street equity research price targets ranged from $46.00 to $60.00, versus consideration of $67.25. | $46.00–$60.00 |
Fee of $10 million, of which one-fourth ($2.5 million) became payable upon rendering of the opinion and the remainder contingent upon closing; expense reimbursement and indemnification. Lazard had in the prior two years advised the Company on strategic/financial matters including shareholder activism defense, for which no consideration was received.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $171M | $189M | $209M | $231M | 10.5% |
| Revenue growth | 10.3% | 10.5% | 10.6% | 10.5% | |
| EBITDA | $46.0M | $53.0M | $62.0M | $67.0M | 13.4% |
| EBITDA growth | 10.8% | 15.2% | 17.0% | 8.1% | |
| EBITDA margin | 27% | 28% | 30% | 29% | |
| Implied EV / EBITDA | 16.4x | 14.3x | 12.2x | 11.3x |
Year-1 growth is against LTM at announcement ($155M revenue, $41.5M EBITDA); later years are year over year.
Management prepared Original Management Projections (dated June 1, 2017) covering fiscal years 2017-2022 and, following Q3 FY2017 results, Updated Management Projections for Q4 FY2017 and FY2018 (identical to the originals for 2019-2022). The Updated Management Projections show Q4 2017E revenue of $36 million and Adjusted EBITDA of $7 million, rising to FY2022E revenue of $231 million and Adjusted EBITDA of $67 million, with unlevered free cash flow of $3 million in Q4 2017E growing to $30 million in 2022E. Assumptions included ~8.6% annual revenue growth from digital transformation of the core business and 220 bps of operating margin expansion; Lazard was instructed by the Board to use the Updated Management Projections and itself calculated unlevered free cash flow.
Process notes
Other Outsourced Services fairness opinions
- Advisory Board Healthcare / Optum 2017 · 10.3x EV/EBITDA
- BioTelemetry / Philips 2020 · 23.7x EV/EBITDA
- Sharps Compliance / Aurora Capital Partners 2022 · 25.2x EV/EBITDA
- CynergisTek / Clearwater Compliance 2022
- Mmodal / One Equity Partners 2012 · 8.1x EV/EBITDA
- SRI Surgical Express / Synergy Health 2012 · 7.6x EV/EBITDA