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Medtronic to Acquire China Kanghui for $816M BY LAUREN UZDIENSKI, SEPTEMBER 28, 2012
Medtronic announced yesterday plans to acquire China Kanghui Holdings, a move that will strengthen the company's presence in the emerging markets. Medtronic will pay $816 million in cash for Kanghui, or $30.75 per American depositary receipt, representing a 22.5% premium over yesterday's closing price of $25.11. Net of cash, the deal is valued at $755 million, which is approximately 11.9x estimated 2012 revenues of $63.6 million and 26.3x estimated 2012 EBITDA of $28.7 million.
Just last month, reports circulated that Medtronic was planning to buy a Chinese company. Calling China "one of the fastest-growing medical device markets with significant scale opportunities", Medtronic said in their press release that Kanghui will provide the company "a bigger and more direct local presence." Among other attributes, Kanghui has a "strong local R&D and manufacturing operation" as well as a "vast" Chinese distribution network. Kanghui offers products in spine as well as trauma, so this transaction also broadens Medtronic's overall orthopedic portfolio and will build upon Medtronic’s present-day joint venture with Shandong Weigao, which may not continue once the contract expires in January 2014.
The transaction is expected to close in the next few months.