The deal announced in August will see Texan device contract manufacturing organisation (CMO) Greatbatch add cardio and vascular medical device capabilities through the acquisition of Lake Region.
The firm has secured a $1.525bn (€1.37bn) credit facility to fund the pending acquisition – expected to have a total cost of around $1.73bn in cash and stock – which has led to credit rating services firm S&P assigning a 'B+' corporate credit rating and a ‘stable’ outlook for the company.
“Our rating on Greatbatch reflects our assessment of the company's business risk profile as 'fair' and the financial risk profile as 'aggressive',” the S&P note said.
“The company offers a broader array of manufacturing services than other smaller CMOs, has strong profitability, and like peers has sticky and long-term contracts and relationships with customers. Still, compared to rated peers with a similar business risk we view the scope of the company's services as somewhat narrow, and having more limited barriers to entry and more price-based competition.”
The deal is expected to close later this year and, according to Greatchbatch, is “transformative” and “will create one of the largest medical device OEM [original equipment manufacturer] suppliers in the world.”
Greatbatch CEO Thomas Hook said the acquisition “brings together two highly complementary organizations that can provide a new level of industry leading capabilities and services to OEM customers while building value for shareholders.”
He continued: “Through this transformative deal, we are going to be at the forefront of innovating technologies and products that help change the face of healthcare, providing our customers with a distinct advantage as they bring complete systems and solutions to market. In turn, our customers will be able to accelerate patient access to life enhancing therapies.”