AngioDynamics, based in Queensbury, N.Y., said the transaction will create a medical technology company with a broad line of access, diagnostic and therapeutic products that enable interventional physicians and surgeons to treat peripheral vascular diseases and cancerous tumors.
Holders of Fremont, Calif.-based Rita will get 0.1722 AngioDynamics common share and some cash, based on AngioDynamics' average closing stock price.
Excluding transaction-related and one-time integration expenses, AngioDynamics expects this acquisition to be neutral to its fiscal year 2007 earnings and to add a nickel per share to its fiscal year 2008 earnings.
"Once the merger of our two companies is complete, the current Rita sales organization will remain intact and will focus on maximizing the opportunity for Rita's radiofrequency thermal tumor ablation products and oncological surgical devices," AngioDynamics said. "The current AngioDynamics sales force will take on responsibility for Rita's specialty access catheter business, which we believe will be a seamless transition. We also look forward to leveraging Rita's 10-person direct sales force in the U.K., Germany and France to sell AngioDynamics' products."
AngioDynamics said it anticipates cost savings of at least $9 million annually from the elimination of duplicate public company, corporate and certain trade-show expenses. It also expects to receive cash-tax benefits exceeding $30 million in aggregate over the next 16 years from the utilization of Rita's federal net operating loss carry forwards.
If the AngioDynamics stock price is between $18.18 and $27.29 per share, each common share of Rita will be swapped for cash and stock totaling $4.70 per Rita share. If the AngioDynamics stock price is below $18.18 per share, Rita common shareholders will receive the equity consideration and $1.57 in cash per Rita share. If the AngioDynamics stock is above $27.29 per share, Rita shareholders will receive only the equity consideration.
Early Tuesday, Rita rose 40 cents to $4.35 and AngioDynamics fell 32 cents to $21.72.