Deal Values Of M&As Declined 8% In Q4 2011

Wednesday 8 February 2012, Amsterdam

The report provides detailed information on M&As, equity/debt offerings, private equity, venture financing and partnership transactions registered in the medical equipment industry in Q4 2011. The report furnishes detailed comparative data on the number of deals and their value in the past five quarters, categorized into deal types, segments, and geographies. The report offers information on the top private equity, venture capital and advisory firms in the medical equipment industry.

Deal Values Of M&As Declined 8% In Q4 2011

M&As and asset transactions, which include change in ownership and control of companies or assets, reported a decline of 8% in deal values in Q4 2011 with deals worth $5.8 billion, as compared to deals worth $6.4 billion in Q3 2011, with growing uncertainty in the global economy discouraging investments in the industry. However, the number of deals increased marginally from 128 in Q3 2011 to 136 in Q4 2011. On a year-on-year basis, the number of deals and deal values decreased 14% and 84% in Q4 2011, when compared to 158 deals worth $35.7 billion in Q4 2010. Out of the 136 deals reported in Q4 2011, 99 were acquisitions worth $5.6 billion; 35 were asset transactions worth $250.7m and two were merger deals.

FUJIFILM Holdings announced the acquisition of SonoSite, a company engaged in designing and developing ultrasound systems used in a variety of medical specialties, for a purchase consideration of approximately $995m. Though this acquisition, FUJIFILM Holdings intends to enhance its technological expertise and develop medical imaging devices to improve medical diagnostics and quality of care for patients worldwide. Miraca Holdings’s acquisition of Caris Diagnostics, a company engaged in the development and commercialization of clinically-validated molecular diagnostics and anatomic pathology services, for $725m, to expand its footprint in the US laboratory testing market; and Getinge AB’s acquisition of Atrium Medical Corporation, a medical device company, for $680m, to expand its operations and presence in the cardiovascular market, are some of the key acquisitions reported in Q4 2011.

The healthcare IT market managed to grab much attention from investors with the growing need for alternative and low-cost solutions for accessing, storing and sharing medical images. Cloud computing gained prominence in the medical imaging field in recent years and helped in archiving large amount of data and sharing images between medical facilities that are not on a common network. The healthcare IT recorded an increase in deal-making activity in Q4 2011. The market reported 27 deals worth $443.9m in Q4 2011.

According to Bhaskar Vittal a analyst, “Increasing efforts to reduce the overall public healthcare spending has led to increased importance of Healthcare IT in the market. The European crises and economic instability in the region has led to a decrease in the M&As in the region.”

Issuance Of Equity And Debt Securities Reduced In Q4 2011

Global equity offerings, including initial public offerings (IPO), secondary offerings, and private investment in public equities (PIPEs), reported a decline in the number of deals and deal values in Q4 2011. There were 68 deals worth $1.5 billion in Q4 2011, as compared to 76 deals worth $1.7 billion in Q3 2011. On a year-on-year basis, deal activity declined in Q4 2011, when compared to 99 deals worth $3 billion in Q4 2010. Of the 68 deals recorded in Q4 2011, 33 were PIPE deals, 30 were secondary/ follow-on offerings and the remaining five were IPOs.

Debt offerings, including secondary offerings and private debt placements, recorded a decrease in the number of deals and deal values in Q4 2011 with 15 deals worth $6.3 billion, as compared to 24 deals worth $6.8 billion in Q3 2011.

Venture Capital Investors Reduced Their Investments In Q4 2011

The medical equipment industry could not attract much investment in Q4 2011 with venture capital investors shifting their focus away from the industry. The VC market reported 209 deals worth $1.3 billion in Q4 2011, as compared to 211 deals worth $1.7 billion in Q3 2011. On a year-on-year basis, the number of deals and deal values increased in Q4 2011, when compared to 170 deals worth $914.3m in Q4 2010.

In Q4 2011, start-up stage deals contributed 45% of the total deals and dominated the VC market. Growth capital/expansion stage deals followed in second place with 36% of the deals. Investment wise, growth capital/expansion financing stood at the top with 49% of the total deal values in Q4 2011, followed by start-up stage financing with 32%

New Enterprise Associates topped the list of venture financing firms by participating in 12 deals with a total deal value of $291.3m during last four quarters (Q1 2011 to Q4 2011).

The private equity (PE) market recorded a decrease in the number of deals and deal values in Q4 2011 with 11 deals worth $885m in Q4 2011, as compared to 13 deals worth $12.5 billion in Q3 2011. On a year-on-year basis, the deal activity declined sharply in Q4 2011, when compared to 30 deals worth $3.5 billion in Q4 2010.

According to Bhaskar Vittal, Analyst at GlobalData, “VC funding is expected to remain stagnant due to significant investments already made by them in the IVD and Healthcare IT markets.”

Eurozone Crisis Continues To Affect Deal Values In All The Regions

In Q4 2011, North America reported a decline of 41% in deal values. The region recorded deals worth $14 billion in Q4 2011 as compared to $23.8 billion in Q3 2011. However, the number of deals increased marginally from 453 in Q3 2011 to 456 in Q4 2011.

With sovereign debt crisis leading to the contraction of the economy, deal values in the European Union declined sharply in Q4 2011. The region reported deals worth $790m in Q4 2011, as compared to $4.3 billion in Q3 2011. The number of deals also decreased to 105 in Q4 2011 from 151 in Q3 2011.

Asia Pacific registered a decline in the number of deals with 73 in Q4 2011 as compared to 85 in Q3 2011. The deal values reported an increase in Q4 2011 with deals worth $1.2 billion as compared to $795.7m in Q3 2011.

According to Bhaskar Vittal, Analyst at GlobalData, “The economical crisis in Europe led to a sharp decline in the number of deals and deal values globally including the North American region. The debt crisis in major European economies and the trickle effect on other economies has led to companies taking cautious decisions while taking any major decisions.”