Synergetics USA acquired by Bausch Health Companies: fairness opinion by William Blair
Deal terms
CVR: One CVR per Share entitling holder to up to $1.00 in cash: $0.50 if ophthalmology product sales reach $55.0 million over any four consecutive calendar quarters during the Milestone Achievement Period (through June 30, 2018), and an additional $0.50 if such sales reach $65.0 million; pro rata portion of second $0.50 if sales for four quarters ending June 30, 2018 are between $55.0 million and $65.0 million
$6.50 per Share in cash plus one non-transferable CVR worth up to $1.00 per Share
Opinion of William Blair to the target board
Discounted cash flow assumptions
Terminal multiple range derived from relevant multiple ranges of the selected precedent transaction analysis; net debt as of April 30, 2015 deducted; diluted shares as of August 26, 2015 (25,574,037 basic shares and 1,075,540 options at $3.99 weighted average strike).
Selected public companies (5)
STAAR Surgical Company · TearLab Corporation · Carl Zeiss Meditec AG · Flextronics International Ltd. · Greatbatch, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Revenue (Ophthalmic Medical Technology comparables) | 2.0x | 4.0x | 4.4x | — | — |
| EV / CY2015E Revenue (Ophthalmic Medical Technology comparables) | 1.9x | 3.5x | 4.2x | — | — |
| EV / LTM EBITDA (Ophthalmic Medical Technology comparables) | 14.2x | 14.2x | 14.2x | — | — |
| EV / CY2015E EBITDA (Ophthalmic Medical Technology comparables) | 12.8x | 12.8x | 12.8x | — | — |
| EV / LTM Revenue (Medical Device Contract Manufacturing comparables) | 0.3x | 1.3x | 2.3x | — | — |
| EV / CY2015E Revenue (Medical Device Contract Manufacturing comparables) | 0.3x | 1.3x | 2.3x | — | — |
| EV / LTM EBITDA (Medical Device Contract Manufacturing comparables) | 5.3x | 8.7x | 12.1x | — | — |
| EV / CY2015E EBITDA (Medical Device Contract Manufacturing comparables) | 5.6x | 8.7x | 11.9x | — | — |
Selected precedent transactions (13)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2015-02 | Optos plc | Nikon Corporation | — |
| 2014-04 | Zygo Corporation | Ametek Inc. | — |
| 2014-01 | Aaren Scientific Inc. | Carl Zeiss Meditec, Inc. | — |
| 2013-05 | Bausch & Lomb Holdings Incorporated | Valeant Pharmaceuticals International | — |
| 2012-12 | MicroSurgical Technology, Inc. | Halma plc | — |
| 2011-10 | Reichert, Inc. | Ametek Inc. | — |
| 2011-07 | Groupe Moria | Edmond de Rothschild Capital Partners | — |
| 2015-08 | Lake Region Medical, Inc. | Greatbatch, Inc. | — |
| 2014-05 | Phillips-Medisize Corporation | Golden Gate Capital | — |
| 2014-08 | Symmetry Medical, Inc. | Tecomet, Inc. | — |
| 2013-02 | Nypro Inc. | Jabil Circuit Inc. | — |
| 2011-11 | Richco, Inc. | Filtrona plc | — |
| 2011-07 | Medisize Corporation | Phillips Plastics Corporation | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Revenue (Eye Care precedent transactions) | 1.7x | 2.7x | 5.0x | — | — |
| EV / LTM EBITDA (Eye Care precedent transactions) | 9.3x | 12.2x | 18.6x | — | — |
| EV / LTM Revenue (Contract Manufacturing precedent transactions) | 0.6x | 1.2x | 2.1x | — | — |
| EV / LTM EBITDA (Contract Manufacturing precedent transactions) | 8.5x | 9.0x | 11.6x | — | — |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| M&A Premiums Paid Analysis | Reviewed 158 acquisitions of publicly traded domestic companies after January 1, 2010 with >50% of target equity acquired at equity value between $75 million and $200 million (excluding closed-end funds and REITs). Implied premiums at $6.50 Cash Consideration vs. August 28, 2015 prices: 48.1% one day ($4.39), 48.4% one week ($4.38), 36.8% one month ($4.75), 38.6% 60 days ($4.69), 43.8% 180 days ($4.52). One-day and one-week premiums were between the 60th and 70th percentiles; one-month at approximately the 50th percentile; 60-day and 180-day between the 40th and 50th percentiles. | — |
$100,000 retainer paid on execution of June 12, 2015 letter agreement; $500,000 payable upon delivery of the fairness opinion; approximately $3.2 million, less fees previously paid, payable upon consummation of the Offer. No portion of fees contingent on conclusions reached.
Management projections
William Blair used internal business, operating and financial forecasts of the Company prepared by senior management (the "Forecasts") covering fiscal years ending July 31, 2016 through July 31, 2020 for its discounted cash flow analysis. Company metrics used in the multiple analyses were LTM net revenue of $76.4 million and CY2015E revenue of $77.1 million, with LTM adjusted EBITDA of $12.0 million and CY2015E adjusted EBITDA of $11.7 million (EBITDA adjusted for stock-based compensation and the Sterimedix Ltd. acquisition as if it had occurred at the beginning of each period). No detailed year-by-year projection figures were disclosed in the sliced sections.
Process notes
Other Medical Devices and Supplies fairness opinions
- Sirona Dental Systems / DENTSPLY 2015 · 16.2x EV/EBITDA
- Liberator Medical Holdings / C. R. Bard 2015 · 11.5x EV/EBITDA
- Sorin / Cyberonics / LivaNova 2015 · 12.3x EV/EBITDA
- Thoratec / St. Jude Medical 2015 · 26.5x EV/EBITDA
- Vascular Solutions / Teleflex 2016 · 25.7x EV/EBITDA
- EndoChoice Holdings / Boston Scientific 2016
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