SurModics Acquisition: Key Details, Impact, and What Comes Next

GTCR's acquisition of SurModics for $627 million marks a significant move in the healthcare sector. This deal, valued at $43 per share, underscores GTCR's commitment to expanding its portfolio in medical device technologies. The acquisition is expected to close in the second half of 2024, transitioning SurModics into a privately held company.

What Is SurModics?

Founded in 1979, SurModics specializes in medical device coatings, interventional products, and in vitro diagnostics (IVD). Their core offerings include customized hydrophilic, hemocompatible, and drug-delivery coatings for intravascular devices, as well as innovative solutions like the Pounce™ Thrombectomy System and Sublime™ Radial Access Platform. SurModics stands out in the market with its leadership in performance coatings and its provision of chemical components for sensitive and robust diagnostic technologies.

Who Acquired SurModics?

GTCR is a prominent private equity firm based in Chicago, specializing in investing in private companies. The firm provides strategic management, operational support, financial restructuring, and growth capital to its portfolio companies. GTCR is recognized for its significant influence in the private equity market, particularly within its geographic region. The firm's reputation is bolstered by its successful investments and the substantial value it adds to the companies it acquires.

When Was SurModics Acquired?

GTCR announced its acquisition of SurModics on May 29, 2024, with the transaction expected to close in the second half of the year. This timing aligns with SurModics' recent advancements, including the FDA clearance of its Pounce LP low-profile thrombectomy system in June 2023. The acquisition also comes amid favorable market conditions, with SurModics reporting strong financial performance and a strategic move to go private, potentially combining with GTCR's investment in Biocoat for cost savings.

Why Was SurModics Acquired?

• Market Expansion: The acquisition of SurModics by GTCR represents a strategic move to broaden GTCR's market presence in the medical technology sector. By integrating SurModics' offerings, GTCR can tap into new customer segments and enhance its portfolio, particularly in the medical device coatings and in vitro diagnostics markets.
• Technology Integration: SurModics brings advanced technologies, such as the Pounce™ Thrombectomy System and specialized coatings for medical devices, which will be integrated into GTCR's existing operations. This integration is expected to enhance GTCR's technological capabilities and innovation pipeline, providing a competitive edge in the healthcare industry.
• Competitive Advantage: The acquisition strengthens GTCR's position against competitors by adding SurModics' specialized products and technologies to its portfolio. This move not only enhances GTCR's market position but also enables the firm to offer more comprehensive solutions, leveraging SurModics' blue-chip customer relationships and history of developing high-performance medical technologies.

Acquisition Terms

• Acquisition Price: $627 million, with SurModics shareholders receiving $43.00 per share in cash.
• Payment Method: The transaction will be financed through a combination of committed equity from funds affiliated with GTCR and committed debt financing.
• Key Conditions or Agreements:
  • The transaction is subject to customary closing conditions, including approval by SurModics shareholders and required regulatory approval.
  • SurModics' Board of Directors has unanimously approved the transaction and recommends that stockholders vote in favor.
  • Upon completion, SurModics will become a privately held company, and its common stock will no longer be listed on the Nasdaq stock exchange.
  • The transaction is expected to close in the second half of 2024.

Impact on SurModics

The acquisition of SurModics by GTCR is set to bring notable changes to the company's operations and management. SurModics will transition to a privately held entity, with its common stock delisted from Nasdaq. This shift is expected to streamline decision-making processes and potentially introduce new leadership appointments. CEO Gary Maharaj has expressed optimism about the partnership, highlighting GTCR's extensive expertise in the healthcare sector. Operational strategies may also evolve, focusing on integrating SurModics' advanced technologies with GTCR's existing portfolio to drive innovation and market expansion.

Regarding product offerings and services, the acquisition is anticipated to enhance SurModics' capabilities and market reach. The company plans to continue the commercial launch of its Pounce LP low-profile thrombectomy system, which recently received FDA clearance. GTCR's involvement is expected to bolster these efforts, potentially leading to the introduction of new products and services. Employee reactions have been cautiously optimistic, with leadership emphasizing the benefits for physicians, patients, and customers. Customer reactions have been positive, with expectations of improved clinical outcomes and strengthened relationships.

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