Angiodynamics Offers $220M To Buy RITA Medical

From BioHealth Investor

Shares of RITA Medical Systems (RITA) jumped 3% on higher volume last Friday with no news. This prompted BioHealth Investor to issue a Watch Alert on RITA shares over the weekend.

Then early Tuesday AngioDynamics, Inc (ANGO) made an offer to buyout RITA for $220 million, including the assumption of $3 million of debt.

RITA, a medical device developer and marketer of ablation and other surgical instruments, should complement ANGO’s peripheral vascular device business very well.

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Both companies have had tremendous sales growth over the last three years, but RITA has had problems reducing its yearly net loss. AngioDynamics has seen an increasing bottom line and cash flow on a yearly basis.

With $89 million in cash and only about $3 million in debt AngioDynamics should have no problem affording the price tag since this deal is a cash and stock offer. Company executives believe that the acquisition should be neutral by mid 2007, and to add about $0.05 to its bottom line by 2008.

This deal makes sense. RITA is rescued from its debt and lack of profit growth, and AngioDynamics grabs hold of exciting surgical ablation and other surgical devices. AngioDynamics also adds RITA’s 30 strong sales force to its 50 sales persons, thereby increasing its sales potential by 60%. Both companies’ products do not overlap each other as well.

RITA made BHI’s Watch List last Friday.