Investors in Cynosure(NASDAQ: CYNO), a laser maker that makes products to be used in aesthetic and medical procedures,should be smiling from ear to ear. News broke on Tuesday morning that the company has accepted a buyout offer fromHologic (NASDAQ: HOLX). Shares rose by 28% as of 11:15 a.m. EST in response.
Cynosure has agreed to be purchased for $1.65 billion, or$66 per share. Hologic plans onusing cash to fund the deal, which will cost the company $1.44 billion after netting out Cynosure's cash balance.The deal has already been given the green light from theboards of directors of both companies.
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Cynosure's CEOMichael Davin said he was thrilled to become a part of Hologic, noting that this deal "enables Cynosure to further capitalize on growth opportunities in the core and non-core aesthetic market, rapidly strengthens our position in women's health -- where Hologic has a leading commercial presence -- and accelerates our R&D initiatives."
The deal is expected to close in March or April of this year.
As expected,Hologic provided investors with a slew of reasons why this deal made sense:
- It gives Hologic a strong position in the fast-growing medical aesthetics market, which currently exceeds $2 billion in global sales and is growing at a low-double-digit rate.
- Cynosure's businesscomplements Hologic's strong position in the women's health space.
- Hologic believes it can achieve approximately $25 million in annualized cost savings by year three after the deal closes.
- The deal promises toaccelerateHologic's growth rates and will be immediately accretive to non-GAAP EPS.
All of that sounds great, but the markets do not appear to share Hologic's' optimism. Shares are falling by more than 3% in early morning trading in response to the news.
Congratulations are in order to any of Cynosure's long-term shareholders. Tuesday's jump puts this company's long-term returns at 248% since its IPO in 2005. With shares trading within a few pennies of its buyout price, the smart move is likely to sell your shares and begin to search for your next home run investment.
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