Vascular Solutions To Be Acquired By Teleflex For $1B
One of Minnesota’s largest publicly traded medtech firms, Vascular Solutions, revealed on Friday that Teleflex Inc. will purchase the company and all of its assets for $1 billion.
Howard Root, who founded Maple Grove-based Vascular Solutions nearly 20 years ago, said his concerns over being targeted by another federal government investigation led him to sell his company.
“Following the jury verdict in February vindicating Vascular Solutions and me, I took some time to consider what I want to do next and what risks I want to continue to assume,” he said in a statement. “I am not willing to assume much longer the personal risk associated with being the CEO of a public, medical-device company.”
Charges made by the U.S. Department of Justice alleged Root trained company salespeople to market its Vari-Lase Short Kit, which is used to treat varicose veins, for treatments not approved by the FDA. The legal process took years to reach its conclusion and ultimately cost Vascular Solutions $25 million in legal fees. Root said earlier this year that he felt “outraged by the obscene legal process we were forced to endure.”
The experience led him to write a book, Cardiac Arrest: Five Heart-Stopping Years As A CEO On The Feds’ Hit List, and become the subject of two documentaries.
Root said he and Vascular Solutions board members reached a unanimous decision to sell to Teleflex for $56 per share in cash. The sale price represents a 16 percent premium over the company’s average closing share price during the three months leading up to December, and a 1.3 percent premium over its Thursday close of $55.25 a share.
Assuming regulators approve the transaction, Vascular Solutions will become a wholly owned subsidiary of the Wayne, Pennsylvania-based medical devices provider within the first half of 2017. Teleflex CEO Benson Smith said the company is expected to approve its acquisition of Vascular Solutions given the new revenue potential that comes with adding Vascular Solutions’ more than 90 medical products to its portfolio.
“Vascular Solutions is a truly unique company with differentiated technologies serving the coronary and peripheral vascular markets,” Smith said in prepared remarks. “They have a demonstrated long-standing track record of delivering double-digit annual revenue growth, stemming from organically developed, patented products that address unmet clinical needs in high-value procedure categories.”
Smith noted that Vascular Solutions’ interventional cardiology and interventional radiology products, in particular, would be complementary additions to Teleflex’s existing portfolio. “We expect this transaction to create value by generating attractive financial returns fueled by incremental revenue growth and accretion to our adjusted margins and adjusted earnings per share beginning in 2017,” Smith said.
Vascular Solutions anticipated 2017 revenues of $183 million to $187 million following 2015 full-year revenue of $147.2 million and strong quarterly performances throughout 2016.
Of the 650 people employed by Vascular Solutions, 550 are located in Minnesota. Employee transition details were not disclosed, although Teleflex CEO Smith said the acquisition would “bolster Teleflex’s leadership and management team with…key members of the Vascular Solutions leadership team.”