Symmetry Medical OEMS Business acquired by Tecomet: fairness opinion by Stifel
Deal terms
Cash merger consideration for SMI common stock plus, in connection with the spin-off, one share of Symmetry Surgical Inc. common stock distributed to SMI stockholders; the per-share cash amount is not stated in the sliced sections.
Implied value per share by method
Ranges as disclosed in the banker’s summary of analyses.
Opinion of Stifel to the target board
Discounted cash flow assumptions
Unlevered free cash flows from July 1, 2014 through December 31, 2018 plus terminal enterprise value as of December 31, 2018; implied enterprise values of $346.7 million to $449.6 million.
Selected public companies (3)
Greatbatch, Inc. · ICU Medical, Inc. · Analogic Corporation
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Net Revenue | 1.4x | 1.9x | 2.0x | 1.4x–1.8x | $7.04–$10.26 |
| EV / 2014E Net Revenue | 1.4x | 2.0x | 2.0x | 1.4x–1.8x | $7.31–$10.61 |
| EV / 2015E Net Revenue | 1.3x | 1.9x | 2.0x | 1.3x–1.8x | $6.94–$10.80 |
| EV / LTM EBITDA | 8.6x | 12.7x | 13.7x | 8.5x–10.5x | $6.77–$9.36 |
| EV / 2014E EBITDA | 9.8x | 10.1x | 10.3x | 9.0x–10.0x | $8.26–$9.65 |
| EV / 2015E EBITDA | 7.7x | 8.9x | 9.2x | 7.5x–8.5x | $6.32–$7.74 |
Selected precedent transactions (13)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2013-12-19 | Tecomet, Inc. | Genstar Capital, LLC | — |
| 2013-11-07 | Paragon Medical, Inc. | Beecken Petty O'Keefe & Company | — |
| 2013-09-13 | IMDS | Golden Equity Investments | — |
| 2012-07-19 | Teleflex Incorporated (Ortho OEM Solutions Business) | Tecomet, Inc. | — |
| 2012-02-24 | Sandvik Medical Solutions Ltd. | Orchid MPS Holdings, LLC | — |
| 2012-01-10 | Remmele Engineering, Inc | RTI International Metals, Inc | — |
| 2011-10-31 | ATEK Medical Group | Vention Medical | — |
| 2011-07-08 | Medisize Corp. | Phillips Plastics Corp. | — |
| 2011-06-15 | Orchid Orthopedic Solutions | Altor Equity Partners | — |
| 2007-08-30 | Avail Medical Products, Inc. | Flextronics International Ltd. | — |
| 2005-10-10 | Accellent Inc. | KKR & Co. | — |
| 2005-04-29 | The Tech Group | West Pharmaceutical Services Inc. | — |
| 2004-04-28 | Medsource Technologies, Inc. | Accellent Inc. | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Net Revenue | 0.8x | 1.3x | 2.7x | 1.0x–1.5x | $3.80–$7.85 |
| EV / LTM EBITDA | 7.0x | 8.3x | 12.6x | 7.0x–9.0x | $4.82–$7.42 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Solicitation of third-party indications of interest | Stifel considered the results of its efforts, at SMI's direction, to solicit indications of interest from selected third parties with respect to a merger or other transaction involving the OEM Solutions Business. | — |
$1.0 million payable upon delivery of the Opinion and an additional advisory fee of approximately $5.5 million contingent upon consummation of the Merger; SMI also agreed to indemnify Stifel. Stifel originally engaged August 16, 2012, superseded by letter dated June 3, 2014.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $330M | $339M | $351M | $364M | 3.4% |
| Revenue growth | 4.2% | 3.0% | 3.5% | 3.6% | |
| EBITDA | $54.0M | $54.6M | $55.9M | $56.5M | 1.5% |
| EBITDA growth | 1.5% | 1.1% | 2.4% | 1.1% | |
| EBITDA margin | 16% | 16% | 16% | 16% | |
| Implied EV / EBITDA | 8.3x | 8.2x | 8.1x | 8.0x |
Year-1 growth is against LTM at announcement ($316M revenue, $53.2M EBITDA); later years are year over year.
Stifel used the "OEM Solutions Projections" prepared by SMI management covering the second half of calendar 2014 and calendar years 2015 through 2018, including projected 2018 EBITDA used to derive the terminal value. Mean/absolute revenue and EBITDA figures for the projection years are not disclosed in the sliced sections. The projections were not prepared with the expectation of public disclosure.
Process notes
Other Medical Devices and Supplies fairness opinions
- CareFusion / Becton Dickinson 2014 · 13.0x EV/EBITDA
- Covidien / Medtronic 2014 · 17.5x EV/EBITDA
- Medical Action Industries / Owens & Minor 2014 · 13.8x EV/EBITDA
- ArthroCare / Smith & Nephew 2014 · 16.1x EV/EBITDA
- Sirona Dental Systems / DENTSPLY 2015 · 16.2x EV/EBITDA
- Liberator Medical Holdings / C. R. Bard 2015 · 11.5x EV/EBITDA
All Medical Devices and Supplies opinions → · Stifel opinions