CryoLife Inc. (CRY), an implantable biological medical device and cardiovascular tissue processing company, agreed to acquire Cardiogenesis Corp. (CGCP), a leading developer of surgical products used in the treatment of patients with refractory angina resulting from diffuse coronary artery disease, for about $22 million in cash as the medical-device company looks to expand its cardiac surgery portfolio.
The offer would pay Cardiogenesis stockholders 45.7 cents a share, a 43% premium over the company’s 32-cent closing price Monday. CryoLife shares closed Monday at $5.63, and both companies were inactive premarket. The deal is expected to close in mid- to late May and will be conducted as a tender offer.
CryoLife said it expects the deal will be neutral or slightly add to 2011 earnings, excluding acquisition and integration costs. The maker of heart valves, surgical adhesives and implantable tissues will finance the buyout using cash on hand.
Cardiogenesis had sales of $11.3 million for the year ended December 31, 2010. Cardiogenesis’ market leading YAG laser system and single use, fiber-optic delivery systems are FDA approved for performing a surgical procedure known as Transmyocardial Revascularization (TMR), which treats patients with angina that is not responsive to standard medications. Patients undergoing TMR treatment with Cardiogenesis products have been shown to have angina improvement, longer event-free survival, reduction in cardiac related hospitalizations, and increased exercise tolerance. The current market potential for TMR surgical procedures in the U.S. is estimated to be greater than $175 million. CryoLife believes that the delivery of biologic materials, such as stem cells, in conjunction with TMR could increase the estimated U.S. market potential to greater than $700 million.