Deals and IPOs

Kinetic Concepts to Buy LifeCell for $1.7 Billion


Kinetic Concepts said Monday it would buy tissue repair company LifeCell for $1.7 billion to expand and diversify its product line.

The $51 per share offer from KCI, which specializes in advanced wound care and therapeutic support systems, represents an 18 percent premium over LifeCell's closing price on Friday.

The two companies said the combined entity would generate revenue of about $2 billion in 2008 and employ more than 7,000 people.

LifeCell's flagship product AlloDerm, which is used to repair damaged tissue in hernias and breast reconstruction, had $167 million in revenue last year. The company won US approval last June for its next-generation regenerative product, Strattice.

"This combination allows us to accelerate our strategy to increase KCI's presence in the operating room and will leverage our broad global market reach to drive future growth of LifeCell's products," KCI Chief Executive Catherine Burzik said in a statement.

KCI said the deal, excluding amortization, would initially hurt earnings per share but would boost it during 2009 and "significantly" help results in 2010 and beyond.

Both companies' boards unanimously approved the transaction, the companies said.

Kinetic plans to use cash on hand and proceeds from a fully underwritten debt financing from Bank of America and JPMorgan Chase Bank for the acquisition.

LifeCell shares rose 16.8 to $50.40 in pre-market trade from its Friday closing price of $43.15 on the Nasdaq.