SurModics Sells Pharma Unit for $30M to Boost Finances
Eden Prairie-based medical products company SurModics, Inc., announced Tuesday that it will sell its pharmaceutical business to German specialty chemicals company Evonik Industries AG.
Evonik will pay $30 million in cash for all of SurModics' pharmaceutical products and services, including a development and manufacturing facility in Birmingham, Alabama.
SurModics said that the sale-which is expected to close by the end of November-will boost its balance sheet and allow it to concentrate on its core medical device and in-vitro diagnostic businesses.
The announcement comes after a turbulent last couple years for the company.
SurModics trimmed 9 percent of its 215-person work force-which included its chief financial officer and its vice president of human resources-in August, and 13 percent of its work force in October 2010 in an effort to cut costs.
In December, New York-based Ramius-the company's largest shareholder-nominated three candidates for board positions due to the company's “long-term underperformance.” Ramius said that shareholders were “not satisfied with the company's poor operational and stock performance” and that operational and strategic changes were required immediately.
SurModics in January agreed to appoint two of the board members nominated by Ramius. Shortly after, Ramius issued a statement saying that it supported efforts to explore strategic alternatives, including selling the company's pharmaceutical business.
For the fiscal year that ended in September 2010, the company reportedrevenues of $69.9 million-representing a 42 percent year-over-yeardrop-and a net loss of $21.1 million. But the company's financial state seems to have improved following its recent initiatives: Inthe quarter that ended on June30, revenue totaled $17.9million and netincome was $3.8 million. Financial resultsfrom the fiscal year thatended in September 2011 will be releasedThursday afternoon.
“The sale of the pharma assets is an important milestone towards achieving our goal of returning SurModics to sustainable, long-term profitability,” SurModics President and CEO Gary Maharaj said in a statement. “After conducting an efficient and thorough review process of our strategic alternatives, we believe this sale creates compelling value for all of the company's stakeholders, including the employees of the pharmaceutical business and the Birmingham community.”
SurModics was founded in 1979 and provides surface-modification technologies for medical devices and in-vitro diagnostic test kits to the health care industry.