Yesterday, Syneron Medical Ltd (ELOS) announced that it would buy Candela Corp. (CLZR) in a $65 million all-stock transaction. The merger is expected to be completed by year-end.
It was agreed that Candela stockholders would receive 0.2911 ordinary shares of Syneron for each share of Candela. 6.7 million shares will be issued by Syneron for the acquisition at about $2.84 per share. This is 51% above Candela’s Tuesday closing price of $1.88. Therefore, the merger is of financial benefit to Candela stockholders.
The merger will result in two medical laser technology providers for aesthetic treatments such as hair removal, wrinkle reduction, acne treatment etc. coming under one roof. The significant cost and product synergies resulting from the deal will increase the international exposure of the merged entity with approximately 62% revenues expected to be generated from outside the U.S. The merged entity will possess significant financial strength, with more than $240 million in cash and zero debt on a pro forma basis, based on the most recent quarter.
The deal, which has received the a of the boards of directors of both companies, aims to create a leading global medical aesthetic device company. The merged entity will have executives from both companies in its management team. Syneron shareholders are expected to own 80% of the combined entity.
Both companies have undertaken several cost reduction measures to combat declining revenues as a result of the economic downturn. The merger, with a broader product portfolio, is expected to be accretive to earnings as markets stabilize.
Read the full analyst report on “ELOS”
Read the full analyst report on “CLZR”
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