NEW YORK (AP) - Diversified manufacturing conglomerate Teleflex Inc. said Monday it agreed to acquire Arrow International Inc., a provider of catheter-based access and therapeutic products for critical and cardiac care, in a cash deal worth about $2 billion.
Teleflex is paying $45.50 per share for Arrow of Reading, Pa., a 20 percent premium over that company's closing price Friday. Arrow shares have traded between $30.04 and $40.50 over the past 52 weeks.
''With the execution of this merger agreement, Teleflex is redefining its portfolio and its medical segment by creating a $1.4 billion medical technology business that will be the largest source of the company's revenues and profitability,'' said Jeffrey P. Black, chairman and chief executive of Teleflex. ''With the addition of Arrow, we expect that by fiscal 2008 the medical segment should achieve annual revenues of approximately $1.5 billion and generate operating margins in the 20 percent range.''
The transaction, which has been approved by both companies' boards, is also expected to add to Teleflex's earnings by 2009. The company added it has already secured the financing commitment for the transaction.
Teleflex, of Limerick, Pa., also confirmed its earnings guidance for 2007, excepting the Arrow purchase, which is expected to dilute earnings this year. The company expects to earn $4.05 to $4.25 per share, compared with the average analyst estimate of $4.19 per share, based on a Thomson Financial poll.
The company also said it has hired Goldman Sachs to review options for its commercial segment, which makes specialty-engineered driver controls, motion controls, power and vehicle management systems and fluid-handing systems for the marine, industrial and automotive markets. Teleflex attributed the decision to its goal of boosting operating margins and reducing cyclicality.
Banc of America Securities LLC is acting as financial adviser to Teleflex in the transaction, and Bank of America, N.A. and its affiliates and J.P. Morgan Securities Inc. have provided financing commitments.
Lazard is providing financial advisory services to Arrow.