Proposed $55.7m Acquisition of Somnus Medical Technologies, Inc.
London - April 27, 2001 - Gyrus Group PLC ("Gyrus" or "the Company") announced that it was in advanced negotiations to make two acquisitions, at which point dealings in the existing ordinary shares of the Company were suspended from listing on the Official List and from trading on the London Stock Exchange.
The Directors of Gyrus announced today that the Company has made a major step in its strategy of developing a specialist head and neck surgery business by agreeing to acquire the Ear, Nose & Throat division of Smith & Nephew, Inc. (the "ENT Business") for $93 million, of which $75 million will be payable on closing, with the balance payable by 1 January 2003. It has also agreed to acquire Somnus Medical Technologies, Inc. ("Somnus") (together "the Acquisitions") in a transaction that values Somnus (on a fully diluted basis) at approximately $55.7 million or $3.11 per share of Somnus ("the Acquisitions"). The Acquisitions are subject, inter alia, to the approval of Gyrus shareholders.
To fund the cost of the Acquisitions, the associated expenses and to raise working capital for Gyrus and its subsidiary undertakings following completion of the Acquisitions ("Enlarged Group"), Gyrus intends to raise approximately £100 million by way of a Firm Placing and Placing and Open Offer of new Gyrus ordinary shares, both of which have been underwritten by the Company's broker, WestLB Panmure Limited, and arranged by WestLB Panmure Limited and Nomura International. The Company has also raised £7.5 million under a standby underwriting facility from West Equity Bridge Finance Limited.
The ENT Business is one of the leading participants in the global market for ENT surgical devices with a 66 year operating history. Through its US sales force of 86 commissioned sales representatives, the ENT Business offers a wide portfolio of products, many marketed under the well-known "Richards" brand. The sales force calls on over 6,000 hospitals and clinics in the US, representing over 90% of practising ENT specialists in the US. Its products are sold in over 60 countries outside the US. The ENT Business had a turnover of $42 million in 2000.
Somnus, a NASDAQ listed company, designs, develops, manufactures and markets medical devices that utilise its proprietary Somnoplasty system (temperature controlled radio frequency technology) that enables the minimally invasive surgical treatment of upper airway disorders by ENT surgeons. Somnus reported product revenues of $12.1 million in 2000.
Gyrus is focused on the management of tissue using less traumatic techniques. The Board believes that the Acquisitions will provide Gyrus with a platform to expand its business in this area and establish a leading position in the field of head and neck surgery, with the following key benefits:
- The ENT Business has an established sales and marketing infrastructure which can be leveraged to sell the Enlarged Group's products and technologies
- The Enlarged Group will have a leading position in the supply of surgical devices to the head and neck surgery market. This will provide a channel through which to enter the high growth cosmetic surgery market and distribute Gyrus' cosmetic surgery system, PlasmaKinetic II, which is expected to be launched in 2002
- Access to the world-wide head and neck surgery market which the Directors believe is worth $900 million at present and could potentially grow to $2 billion by 2003
- The ENT Business has a strong record of revenue and cash generation
- Somnus provides access to the innovative Somnoplasty system
- There are a number of cross-selling and cost saving opportunities
- The Acquisitions are expected to be earnings enhancing before certain non-recurring costs and goodwill amortisation in the first 12 months following completion of the Acquisitions, and significantly enhancing (before amortisation of goodwill) in the next following 12 months
Commenting on today's announcement, Mark Goble, Group Managing Director of Gyrus, said:
"These two strategic acquisitions will provide Gyrus with the technologies, customer-base and distribution capabilities in the US and Europe required to accelerate our entry into the market for head and neck surgery.
"The ENT Business will provide us with an established direct sales and marketing operation and the acquisition of Somnus brings an innovative surgical system for the treatment of upper airways disorders. In combination with Gyrus' own technology for both open and endoscopic surgical procedures, these acquisitions can be leveraged to establish the Enlarged Group as one of the leaders in the global market for head and neck surgical devices."
Gyrus was advised by Bear, Stearns International Limited in relation to the acquisition of the ENT Business, by Nomura International in relation to the acquisition of Somnus and West LB Panmure Limited in relation to the Firm Placing and the Placing and Open Offer.
Gyrus Group PLC
Tel: 07974 985333
Dr Mark Goble, Group Managing Director
Tom Murphy, Finance Director
West LB Panmure Limited
Tel: 020 7638 4010
Chris Collins/Juliet Thompson/Dominic Morley
Bear, Stearns International Limited
Tel: 020 7516 6937
Nomura International plc
Tel: 020 7521 2000
Charles Spicer/Steve Adkin
Tel: 020 7831 3113
Edward Bridges/Alistair Hetherington
A presentation for analysts will be held today, 4 May 2001, at 10am at the offices of Financial Dynamics, Holborn Gate, Southampton Buildings, London, WC2A 1PB. Please call Jenny Alves on 020 7831 3113 for further details.