On Tuesday, medical aesthetics equipment maker Solta Medical (NASDAQ: SLTM ) announced that it has agreed to acquire privately held peer Sound Surgical Technologies for $30.5 million -- $5 million cash, plus $25.5 million worth of Solta's own stock. Solta also may pay Sound Surgical's shareholders up to $9.5 million more in "earn outs" based on the company's performance in 2013.
Sound Surgical grew revenues 40% to $23 million in 2012, generating more than $2 million in earnings before interest, taxes, depreciation, and amortization. Solta says the acquisition should be accretive to earnings, exclusive of purchase and integration costs, within a year after closing.
Solta expects to close the transaction in Q1 2013. Sound Surgical CEO Daniel S. Goldberger has agreed to stay on as a consultant for six months post-acquisition to assist with the integration of the two companies.
At a maximum purchase value of $40 million, Solta is paying approximately 1.74 times sales for Sound, a significant premium to the 1.3 times sales valuation its own shares command. These shares closed up 0.4% Tuesday, by the way, at $2.62 ahead of the announcement.
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