Medical device companies
climbed Monday after announcing a merger that will create a $1.7 billion company.
Under the $780 million deal, FoxHollow stockholders will receive 1.45 shares of ev3 common stock in addition to $2.75 in cash for each share. That represents total consideration of $25.92 a share, based on the July 20 closing prices. The price represents a premium of more than 20% premium to the 30-day average trading price for FoxHollow's shares.
Redwood City, Calif.-based FoxHollow specializes in medical devices primarily for peripheral artery disease (PAD) and other cardiovascular disease, while ev3, of Plymouth, Minn., focuses on minimally invasive technologies for vascular diseases and disorders.
"The combined company will enhance our aggressive market building activities and accelerate our clinical and research and development initiatives in this market," said John Simpson, chief executive of FoxHollow.
The merged company will be owned 59% by ev3 shareholders and 41% by FoxHollow shareholders. Jim Corbett, chief executive of ev3, will serve as chairman and chief executive of the merged company, and Simpson will serve as vice chairman and chief scientist.
Looking ahead, the companies project annual cost savings of more than $40 million from the merger. They anticipate net sales in the range of $585 million to $615 million in 2008, and adjusted earnings of 60 cents to 70 cents a share in 2008 and 90 cents to $1.10 a share in 2009.
The companies said late Sunday that both boards have approved the merger, which they expect will close in the fourth quarter pending approval by FoxHollow stockholders. Certain FoxHollow stockholders, including John Simpson and
, who together own nearly 32% of its outstanding shares, have agreed to vote all of their shares in favor of the transaction.
ev3 rose $1.66, or 10.4%, to $17.64, and FoxHollow gained $2.48, or 10%, to $27.20 in recent trading Monday.