Shares of Eden Prairie-based Thermodics Inc. soared Wednesday on reports that a sale that would take the medical device company private is imminent.
Chicago-based private equity firm GTCR will pay $627 million, or $43 per share, for Thermodix when the transaction closes later this year, pending shareholder and regulatory approval. Healthcare and technology are GTCR's key sectors, and the firm said in May 2023 it had organized an $11.5 billion fund to acquire companies in the technology, healthcare, financial and consumer services sectors. The firm currently manages $40 billion of equity capital.
Thermodics shares closed at $35.10 a share on Tuesday but rose 19.9% on Wednesday, approaching the price GTCR is paying.
Thermodics makes coatings and parts for medical devices, including in-vitro diagnostic tests. Though sales are currently down 6% to 8%, the company recently forecast revenue of $122 million to $124 million for the current fiscal year.
“We think it would make more sense for a private equity firm to acquire it. [Surmodics] “This is more of a strategic deal than a strategic one, as the company derives more than 29% of its revenue from coatings it sells to other medical device companies and believes its customers are unlikely to purchase coatings from competitors,” Mike Matson, senior research analyst at Boston-based Needham & Co., said in a research note on the deal. “We believe the transaction fairly values the company.” [Surmodics] … We don't expect a higher offer or any antitrust issues.”
The Medtronic deal accounted for 27% of Thermodics' revenue last year; the remaining 10% came from Abbott.
Thermodics said in a filing with the U.S. Securities and Exchange Commission that the company is conducting “business as usual” despite the sale.
“We believe this transaction will enable us to continue to deliver compelling benefits to physicians, patients and customers,” Thermodics CEO Gary Maharaj said in a statement.
In February 2023, Thermodix cut 13% of its workforce following delays in approval of its drug-coated balloon, Sarvail, by the U.S. Food and Drug Administration. The FDA approved the device in June 2023. Thermodix had previously signed a contract with Abbott to sell the Sarvail device, which is used to treat peripheral artery disease by reopening blocked or narrowed arteries in the legs.
“I think a private equity transaction makes sense. GTCR is a well-known, experienced company,” said Brooks O'Neill, senior research analyst at Minneapolis-based Lake Street Capital Markets.
O'Neill added that he would not be surprised if “the GTCR guys” approached Thermodics with a deal, as the company had not been publicly listed for sale.
As of Sept. 30, Thermodics had 376 employees, 101 of whom were outside the U.S. This is due to the company's 2021 acquisition of Ireland-based Vetex Medical for $39.9 million.
“We look forward to partnering with the Thermodics team to expand their offering and broaden their reach,” GTCR managing director Sean Cunningham said in a statement.
A representative for GTCR declined to comment further.
