Hill-Rom, a provider of hospital equipment, medical devices and surgical products, will acquire Welch Allyn for approximately $2.05 billion in cash and stock. Under the terms of the agreement, Welch Allyn shareholders will receive $1.625 billion in cash and approximately 8.1 million newly-issued shares of Hill-Rom common stock. After the acquisition is closed, which is slated before the end of September 2015, Welch Allyn shareholders will own approximately 13 percent of the combined company.
Together, Hill-Rom and Welch Allyn will leverage their respective infrastructures and product portfolios to provide physicians and other caregivers with improved diagnostics, sensing and patient monitoring technologies, along with the market leading solutions. In the official release, Hill Rom states additional benefits of the integrated offering include:
– Creates Stronger, More Diversified Platform to Drive Growth: Welch Allyn is one of the premier brands for hospital and physician office-based patient care, and its portfolio of products will immediately expand the combined company’s portfolio with point of care diagnostics and testing. With this expanded platform, the combined company will have stable recurring cash flow, with less than one third of the company’s revenue occurring from large acute care capital equipment. Furthermore, the company’s significantly enhanced financial position and breadth of resources will enable it to further invest in its R&D programs and pursue additional M&A opportunities.
– Enables Hill-Rom and Welch Allyn to Better Meet Customer and Patient Needs in an Evolving Healthcare Market: As Hill-Rom continues to move into patient sensing at the bedside and expand in the operating room, Welch Allyn will bring deep expertise and complementary products. The combined company will capture efficiencies and cut costs in its patient-centric care models by coordinating care across settings and maximizing the inter-operability of its devices. It will also reduce supply chain complexity and improve operational efficiencies for its customers. With a single call point across a broader set of products and services, the company will be larger, more streamlined, and better positioned to meet its customers’ needs.
– Creates Additional Opportunities for Employees: A combined Hill-Rom and Welch Allyn will result in a significantly larger global company with operations in over 30 countries and approximately 10,000 employees around the world. Employees in the combined company are expected to have more opportunities to pursue careers across a larger, more diversified global business.
“As one company, we will have the infrastructure, capabilities and innovative product portfolio to faster pursue a differentiated business model that meets the evolving needs of patients and customers and delivers superior healthcare outcomes across multiple care settings. We believe this combination, which will be accretive to Hill-Rom’s adjusted gross and EBITDA margins, will also result in an enhanced financial profile, creating the opportunity for accelerated growth,” said John J. Greisch, President and CEO of Hill-Rom in an official statement.
Hill-Rom expects the acquisition of Welch Allyn will be immediately accretive to Hill-Rom’s adjusted gross and EBITDA margins. Additionally, Hill-Rom expects the transaction to be more than 10 percent accretive to adjusted earnings per share in 2016 and meaningfully more accretive thereafter.
