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MANNING ADVISORS LLC
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News and Advisories

  • Apr 09 / 2015
  • Comments Off on Deal Alert: Elos to acquire Onyx Medical
Acquisition, Deal Brief

Deal Alert: Elos to acquire Onyx Medical

Elos, the Swedish medical contract manufacturer, has announced the acquisition of Onyx Medical, an orthopedic supply chain manufacturer in Memphis, Tennessee. Key points:
 

  • Elos, a US$47 million company, is making its first major US acquisition
  • Onyx Medical specializes in trauma and extremity products. 2014 sales are reported at $16 million
  • Elos stated that it views Onyx as a platform acquisition

 
The transaction demonstrates the continued interest of European medtech companies in gaining US market share.
 
More information

  • Mar 09 / 2015
  • Comments Off on Alcoa to acquire RTI Metals, Inc.
Acquisition, Deal Brief, Metals

Alcoa to acquire RTI Metals, Inc.

Alcoa (NYSE:AA) announced today that it would acquire RTI International Metals, Inc. (NYSE:RTI) for $1.5 billion in an all-stock transaction coupled with assumption of debt. Key points:

  • The deal puts a 36% premium on RTI stock over last Friday’s close.
  • RTI’s most recent numbers put it at $794 million in revenues (ttm) and $115 million in EBITDA (source: CapitalIQ)
  • Alcoa’s primary interest is RTI’s titanium operations which will bolster Alcoa’s rapidly growing aerospace business

Alcoa expands its position in aerospace but what about Remmele?

RTI is a logical acquisition for Alcoa as it expands its specialty metals focus. A question for those in the medical supply chain is whether Alcoa will keep Remmele, RTI’s medical machining business in Minnesota.

To discuss this transaction and other trends in the medical supply chain please contact Richard W. Sager at Manning Advisors at rsager@manningadvisors.com or at (585) 315-8413 directly.

Read more on the transaction here.

As always, I look forward to your questions and comments.

  • Feb 17 / 2015
  • Comments Off on Talk of the MD&M West Show
Medical Device

Talk of the MD&M West Show

Medical device contract manufacturers challenged to add new marquee OEMs to their customer lists.

Despite years of investment in new facilities, expanded capabilities, and new quality systems many supply chain companies have had difficulty convincing large OEMs to place orders. Ongoing consolidation among the big-name OEMs has created a smaller pool of highly desirable sales prospects. Contract manufacturers point to excess capacity, perceived switching risk, and shifting priorities among OEMs as their greatest challenges. A number of strategies are debated.

Contact Manning Advisors for a fuller discussion of the issue.

  • Sep 17 / 2014
  • Comments Off on LSA Laser Acquired by AdvancedCath
Acquisition, Deal Brief

LSA Laser Acquired by AdvancedCath

AdvancedCath announced today the acquisition of LSA Laser of Plymouth, MN. LSA is a laser manufacturing specialist specializing in medical components and assemblies. LSA is unusual in laser space for its ability to work both medical metals and plastics.

Financial information regarding the transaction was not released.

Analysis

AdvancedCath is a rollup contract manufacturer focused on interventional products. Formed from TechDevice, AdvancedCath Technologies, MP&E, and now LSA, the company brings significant material, molding, balloon, guidewire, and device assembly expertise to this rapidly growing area of medicine. The AdvancedCath strategy of concentrating on certain high-value devices is challenging to execute but, when successful, leads to among the highest multiples in transaction value.

I look forward to your questions and comments via email, or directly at (585) 315-8413.

  • Aug 05 / 2014
  • Comments Off on Cadence Acquires Business Units From Plainfield Precision
Acquisition, Deal Brief

Cadence Acquires Business Units From Plainfield Precision

Cadence, Inc. announced today it has acquired three business units from Plainfield Precision. The units, located in Wisconsin, Massachusetts, and the Dominican Republic, add metal stamping and injection molding to Cadence’s portfolio of capabilities.

Financial information regarding the transaction was not released. Prior to the transaction Cadence announced revenues of $33.6 million for the first half of 2014.

Analysis

Cadence is known for carefully considered strategies. This acquisition continues their approach of expanding capabilities incrementally as a means of being a more strategic supplier to key customers. The Cadence website is located at www.cadenceinc.com.

I look forward to your questions and comments at rsager@manningadvisors.com or directly at (585) 315-8413.

  • Aug 04 / 2014
  • Comments Off on Tecomet to acquire Symmetry Medical’s OEM Solutions Business
Acquisition, Deal Brief, Market Letters

Tecomet to acquire Symmetry Medical’s OEM Solutions Business

Tecomet and Symmetry Medical (NYSE:SMA) announced today that Tecomet will acquire Symmetry’s OEM Solutions Business for $450 million in an all cash transaction. OEM Solutions manufactures orthopedic implants, instruments, and cases and is based in Warsaw, Indiana.

The Numbers

Relying on Symmetry Medical’s published numbers for the last four reported quarters:

Symmetry Medical OEM Solutions

Q1 2013 through Q1 2014 1
($ thousands)

Revenues

$316,196

Operating Income 2

$29,025

Estimated EBITDA 2

$42,325

Est. EBITDA Multiple on $450 million transaction

10.6X

1 Source: Symmetry Medical financial reports on file with Securities and Exchange Commission
2 Includes adjustments for one-time and non-recurring events by Manning Advisors

Analysis

The big get bigger. Tecomet has been an acquirer in the recent past, buying Teleflex’s OEM orthopedics business in 2012. The combined entity looks to have consolidated revenues of over $400 million.

This transaction is another example of supply chain consolidation forming dominant players of over $100 revenue. It also illustrates the enhanced premiums consolidators will pay for dominant market/customer position.

For More Information

Please contact Richard W. Sager at Manning Advisors at rsager@manningadvisors.com or directly at (585) 315-8413.

  • Jun 16 / 2014
  • Comments Off on Medtronic to Acquire Covidien – Issues for the Supply Chain
Deal Brief

Medtronic to Acquire Covidien – Issues for the Supply Chain

Medtronic’s announcement Sunday night that it intends to acquire Covidien points to continuing consolidation in the medical supply chain with carryon benefit to large contract manufacturers.

The Deal

Medtronic (NYSE: MDT) will pay $35.19 in cash and .95 of a Medtronic share per share of Covidien. The transaction values Covidien (NYSE: COV) shares at 29% premium to the Friday closing price. The total value of the deal is $42.9 billion. The combined annual revenues of the two firms is just over $27 billion, making the new entity the second largest medical device manufacturer just behind J&J with $29 billion in sales.

Issues for the Supply Chain

In the short term there should be no changes of significance for suppliers of either company. Medtronic and Covidien are too large and have too much risk on the table to begin merging their supplier bases for some time. This transaction, however, should serve as a warning to the supply chain. The Medtronic/Covidien deal is the second large combination among the 30 largest OEMs in the last two years and the third in four years. We see fewer large OEMs over time with correspondingly fewer large contract manufacturers supporting their outsourcing needs. Contract manufacturers under $50 million must concentrate on a strategy that will allow them to prosper in a world of fewer giants.

On the other hand, contract manufacturers with sales of over $100 million and a broad portfolio of capabilities will continue to benefit from consolidation.

For More Information

Please contact Richard W. Sager at Manning Advisors at rsager@manningadvisors.com or directly at (585) 315-8413.

  • Mar 21 / 2014
  • Comments Off on The Limitations of “Value Engineering”
In the News

The Limitations of “Value Engineering”

Bloomberg published a fascinating article today detailing the consequences GM faces for price squeezing their suppliers. As more industries adopt parts of the “automaker’s playbook” for managing their supply chains this topic is timely.

Read here.

  • Oct 17 / 2013
  • Comments Off on Helix Medical acquires MedVenture Technology Corp.
Deal Brief, Medical Device

Helix Medical acquires MedVenture Technology Corp.

Helix Medical LLC announced the acquisition of MedVenture Technology Corp., a 260 person medical device design and manufacturing firm specializing in catheter technology.

Manning Advisors advised Helix on this transaction.

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