In a move to establish a leadership position in the interventional neurology marketplace, Micro Therapeutics Inc (MTI) announced the signing of a definitive agreement to acquire Dendron GmbH, a privately held, German-based developer and manufacturer of neurovascular focused products such as embolic coils for the treatment of brain aneurysms. The acquisition will be accomplished in an all-cash transaction of up to $40 million, including earn-out contingent payments, and is expected to close in the fourth quarter of 2002.
"This acquisition advances our strategic objective of establishing MTI as a premier provider of minimally invasive devices for the treatment of neurovascular disorders," said James Corbett, MTI's Chairman. "Dendron's state-of-the-art detachable coils complement our Onyx and neuro access device product lines, providing MTI with a broader product offering and the opportunity to leverage our worldwide marketing, sales and distribution system."
Dendron's product lines include a broad array of detachable coils, all of which have obtained CE Mark approval for sale in Europe, including its newest product, the Variable Detachable System (VDS). The VDS provides for coil deployment in what both MTI and Dendron believe is a safer, more efficient fashion than current systems on the market today. MTI said that Dendron's products will be marketed in Europe, Japan and other international markets through MTI's distribution partner, ev3 International. MTI intends to submit Dendron's products for 510(k) market clearances with the U.S. Food and Drug Administration, however, no assurance can be given that such clearances will be obtained. With such clearances, MTI intends to subsequently distribute Dendron's products in the U.S. through MTI's direct sales force, which currently distributes MTI's full line of neurovascular access and delivery products.
Coils have been used for several years as a treatment for certain types of aneurysms and other vascular malformations. They are deployed to the vascular site via specially designed micro catheters. Once in place, their presence in the vascular defect is intended to occlude the site while maintaining the integrity of the native vessel, thereby allowing normal blood flow to continue and reducing the potential for the vascular rupture.
Under the definitive agreement, MTI will make a cash payment of $25 million at the closing date, which is anticipated to be on or after September 30, 2002. Additional payments, aggregating $15 million, are contingent upon Dendron products achieving certain revenue targets between 2003 and 2008. To finance the initial $25 million payment and anticipated short-term working capital needs of the acquired operations, MTI has obtained a commitment from Micro Investment LLC, whose principal investors are Warburg, Pincus Equity Partners, L.P. and The Vertical Group, to lead a $30 million private common stock offering, either as the sole or as a participating investor. The price per share of the financing will be determined by a formula that is based on the closing price of MTI's stock for the fifteen trading days ending September 10, 2002, but in no case will be outside a range between $2.07 to $2.50. Such shares have not been registered under the Securities Act of 1933 and until so registered may not be offered or sold in the United States absent registration or availability of an applicable exemption from registration. The offering will be made by MTI without a selling agent.