Mediq acquires all the assets of US-based A-Med Health Care for a total consideration of € 29.4m. A-Med delivers mainly urological products to patients in California and employs around 75 FTE’s. Mediq has been active in the US with Byram Healthcare since 2008.
Mediq pays € 29.4m, representing an EBITDA multiple of approximately 7.5, excluding synergies. Including synergies (over $ 1m as of FY14), the multiple is around 6. The acquisition will be financed from existing credit facilities. Mediq’s ROCE target of 15% pre tax is expected to be met by 2014. Closing of the transaction is expected before YE12.
The acquisition fits perfectly in Mediq’s US buy and build strategy and will enhance Byram’s position in the large but fragmented US market.
We remind that on September 24, Advent made an all cash bid for all outstanding Mediq shares for € 13.25/share. Given that Mediq and certain shareholders (representing over 20.2%) approve the bid, the 53% premium offered, and because the delisting transaction is the preferred scenario for the company itself, we expect the chances of success of the bid to be high.
Mediq’s share price is approaching the offered bid price. We see little failure risk but nevertheless prefer to await the prospectus to make a final recommendation. As the upside potential is limited, we downgrade from Buy to Hold. Our TP of € 13.25 remains unchanged.