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A novel Conceptus
MOUNTAIN VIEW, Calif.—Bayer HealthCare LLC, a subsidiary of Bayer AG, has inked a definitive merger agreement with Conceptus Inc., under which it will acquire the California-based company for $31 per share in cash, for an approximate transaction value of $1.1 billion. Bayer commenced its cash tender offer for all of Conceptus' outstanding shares on May 7.
Conceptus specializes in the development and commercialization of device-based solutions in permanent birth control, with its lead product consisting of the Essure procedure, a surgery- and hormone-free permanent birth control method. The procedure can be performed in a physician's office in less than 10 minutes, and has a 99.8-percent effectiveness rate based on five years of follow-up, with no pregnancies reported in clinical trials. The procedure was CE Mark approved in 2001, and gained U.S. Food and Drug Administration approval in 2002.
"Both Bayer and Conceptus are focusing on innovative solutions to advance women's healthcare. Essure completes Bayer's portfolio of long-acting intrauterine systems and short-acting oral contraceptives. Our experience in the field of gynecology combined with our sales and distribution expertise will help to further develop Conceptus' business," Andreas Fibig, president of Bayer HealthCare Pharmaceuticals and member of the Bayer HealthCare Executive Committee, said in a press release.
Conceptus brings with it a global presence, with subsidiaries and market presence in France, the United Kingdom and the Netherlands, and currently employs approximately 300 people. No details were released as to Bayer's plans for Conceptus' facilities or employees.
The same day Conceptus announced the signing of the merger agreement with Bayer, it also released its first quarter financial results. The company posted revenues of $34.1 million for the quarter, up 17.5 percent from Q1 2012, with U.S. sales of $26.5 million and international sales of $7.6 million. Conceptus' net income for the quarter was $1.9 million. For the fiscal year 2012, Conceptus saw net sales of $141 million, with adjusted EBITDA of $28.2 million.
"Essure has been well accepted in the market for more than 10 years and demonstrated robust growth over this time," D. Keith Grossman, president and CEO of Conceptus, commented in a statement. "We believe that under Bayer's ownership, the Essure product will more rapidly become the standard of care in our established markets, and will benefit in new markets from Bayer's global presence. Our customers and patients will benefit from this increased access to the benefits of Essure."
The acquisition expands Bayer's existing portfolio of contraceptive products, which includes the Yaz, Yasmin and Natazia pills, and Mirena, an intrauterine device. It could also help to offset losses caused by generic competition for Yaz. Parsippany, N.J.-based Actavis Inc. relaunched Vestura, its generic version of Yaz, mid-April after the United States Court of Appeals for the Federal Circuit ruled in its favor that Bayer's patent was invalid.
Zacks Equity Research commented on the transaction, noting as prices on Conceptus' shares rose in the wake of the announcement that "Conceptus' shareholders might not benefit a great deal from the buyout." As of the end of April, Zacks rated Conceptus with a Zacks Rank #3 (Hold). In a more recent May commentary, Zacks noted that "successful completion of the acquisition would ensure the presence of short-term, long-term and permanent contraceptive choices from Bayer's portfolio for women."
Conceptus' board of directors unanimously recommended that the company's shareholders accept the offer, which is set to expire at midnight on June 5. Completion of the offer is subject to a minimum tender of at least a majority of Conceptus' outstanding shares and antitrust clearance in the United States, as well as other customary closing conditions. The transaction is expected to close mid-2013.