Thursday, GE Healthcare, a unit of diversified conglomerate General Electric Co. (GE), said it agreed to acquire medical device maker Vital Signs, Inc. (VITL) for about $860 million. The deal is expected to boost GE Healthcare's monitoring, anesthesia and respiratory care offerings. On the takeover news, shares of the Totowa, New Jersey-based Vital Signs are currently up about 26%.
As per the terms of the deal, Vital Signs stockholders would get $74.50 per share in cash, representing a 28.4% premium over Vital Signs' Wednesday closing stock price of $58.
Commenting on the deal, John Dineen, CEO of GE Healthcare, said, "This acquisition is consistent with GE's strategy to invest in high-technology, innovative businesses that deliver top-line growth, earnings expansion and expanded margins. Vital Signs has consistently grown at double-digit rates while generating strong operating margins. Its products are a great complement to our existing anesthesia, monitoring and respiratory offerings."
The transaction, which is subject to Vital Signs' shareholder and regulatory approvals, as well as other customary conditions, is expected to close in the fourth calendar quarter of 2008. In addition, shareholders holding approximately 37% of Vital Signs' common stock have agreed, among other things, to vote their shares in favor of the acquisition.
Vital Signs is a provider of medical products applicable to a wide range of care areas such as anesthesia, respiratory, sleep therapy and emergency medicine. Upon the close of the deal, Vital Signs will become part of GE Healthcare's Clinical Systems business, a provider of advanced technologies for patient monitoring, anesthesia delivery and acute respiratory care.
In May, Vital Signs reported 15.9% growth in its second-quarter profit to $9.97 million. Revenues increased to $58.93 million from $52.65 million a year-ago. For the full-year 2008, the company forecasts earnings in a range between $2.82 and $2.87 per share. Analysts, on average, expect earnings of $2.85 per share. In 2007, Vital Signs earned $19.16 million on revenue of $205.26 million.
Shares of Vital Signs are up $14.79 or 25.50% and currently trading at $72.79, a 52-week high for the stock. In the past 52-weeks, the stock has been trading between $45.06 and $61.20.
GE shares are currently trading at $29,32, down by a penny. In the past 52-weeks, the stock has been trading between $25.60 and $42.15.
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