Span-America Medical Systems, Inc. (NASDAQ: SPAN) announced today that it has acquired substantially all the assets of M.C. Healthcare Products Inc. (MCHP). MCHP, located in Beamsville, Ontario, Canada, is a privately-owned manufacturer and marketer of medical bed frames and related products for the long term care market. “We are excited about combining M.C. Healthcare with Span-America to leverage our product solutions and marketing opportunities in the long term care market,” stated Jim Ferguson, president and chief executive officer of Span-America. Ferguson says the move will expand the company’s market potential by bundling a robust line of medical bed frames with Span-America’s broad line of branded therapeutic support surfaces. “M.C. Healthcare’s product line fits very well with our current medical business,” he said. “We already sell to many of the same customers, attend the same trade shows and have similar sales and marketing efforts.” The company expects the acquisition to be accretive to its earnings in fiscal 2012. MCHP reported sales of CDN $12.2 million and operating profit of CDN $170,000, which includes non-recurring and owner-related expenses of CDN $1.5 million and CDN $84,000 in depreciation and amortization for the fiscal year ended July 31, 2011. Under the terms of the transaction, Span-America acquired, through a wholly-owned subsidiary, substantially all of the assets of MCHP for CDN $8.0 million cash plus 100,000 shares of Span-America common stock. The purchase price is subject to certain working capital adjustments as set forth in the acquisition agreement. Span-America will fund the acquisition through a combination of cash on hand and proceeds from a renewal of its $10 million revolving credit facility that includes a temporary line-of-credit increase from $10 million to $13 million. The assets purchased consist primarily of accounts receivable, inventory, manufacturing equipment and intellectual property. Liabilities assumed consist primarily of ordinary course accounts payable and accruals. The transaction is expected to result in goodwill of approximately CDN $6.5 million.
In this series, we look through the most recent Dividend Channel ''DividendRank'' report, and then we cherry pick only those companies that have experienced insider buying within the past six months. The officers and directors of a company tend to have a unique insider's view of the business, and presumably the only reason an insider would choose to take their hard-earned cash and use it to buy stock in the open market, is that they expect to make money — maybe they find the stock very undervalued, or maybe they see exciting progress within the company, or maybe both.