Merit Medical Systems to acquire BioSphere Medical

May 14 2010

Merit Medical Systems, Inc. (Nasdaq:MMSI) today announced that it has signed a definitive merger agreement to acquire BioSphere Medical, Inc. (Nasdaq:BSMD) in an all cash transaction valued at approximately $96 million, inclusive of all common equity and Series A Preferred preferences.

The merger agreement provides for a cash payment of approximately $4.38 per share for each outstanding share of BioSphere common stock, representing a premium of 54% over BioSphere's closing share price on May 12, 2010.  

BioSphere develops and markets embolotherapeutic products for the treatment of uterine fibroids, hypervascularized tumors, and arteriovenous malformations. Embolotherapy procedures are primarily performed by interventional radiologists and use bioengineered microspheres to create targeted vascular occlusion and drug delivery. Embolotherapy has become an accepted alternative for many women suffering from uterine fibroids who may otherwise undergo a hysterectomy. Similarly, with 600,000 new cases of primary liver cancer per year, there is growing international adoption of embolotherapy with drug-delivery protocols to treat liver cancer.

 "The acquisition of BioSphere represents a truly strategic investment for Merit," said Fred P. Lampropoulos, Chairman and CEO of Merit. "We believe BioSphere offers the most advanced embolotherapy technology available today and represents a valuable platform for therapeutic technologies. Our more than twenty years' experience delivering point-of-sale clinical solutions to interventional radiologists, combined with our global distribution channels, position us well to capitalize on the BioSphere technology in the market. We believe we can drive incremental use of the women's health and oncology applications among interventionalists, while providing significant benefit to patients. We anticipate that our ability to increase sales and create operational efficiencies will deliver enhanced value to our shareholders." 

Through the acquisition of BioSphere, Merit will obtain a platform technology applicable to multiple therapeutic areas with significant market potential while leveraging existing interventional radiology call points. Two immediate applications for embolotherapy are uterine fibroids and primary liver cancer, which Merit believes represent a worldwide market potential of $650 million and $380 million, respectively. Embolotherapy has demonstrated compelling benefits to patients, physicians and payers.

Merit anticipates that the proposed transaction will be dilutive to Merit's earnings per share in calendar year 2010 as a result of transaction fees, restructuring costs and other one-time costs, and is expected to be accretive to Merit's earnings per share in calendar year 2011 and beyond. Merit also expects to achieve sales synergies driven by adding BioSphere products into Merit's global sales channels. Merit's recent product introductions, such as the Maestro™ microcatheter and the Merit Laureate™ hydrophilic guide wire, as well as Merit's vascular access products, complement and enhance Merit's opportunities to bundle complementary products. Merit also expects to recognize efficiencies through the reduction of redundant expenses in sales, marketing and general and administrative functions. 

The transaction has been approved by the board of directors of both companies, and is subject to the satisfaction or waiver (in accordance with the provisions of the Merger Agreement) of certain closing conditions, including the approval of the BioSphere shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions. It is anticipated that the transaction will close in the third calendar quarter of 2010. The transaction is not subject to a financing condition, as Merit has secured a commitment for a credit facility in an amount that Merit believes is sufficient to consummate the transaction. 

Piper Jaffray & Co. served as financial advisor to Merit, and J.P. Morgan Securities Inc. served as the financial advisor to BioSphere. Parr Brown Gee & Loveless served as the legal advisor to Merit. WilmerHale LLP served as legal advisor to BioSphere.