CD&R Looks to Buy Medical Laser Maker

Clayton, Dubilier & Rice has agreed to acquire Cynosure, a maker of products used in aesthetic and medical procedures, from publicly traded Hologic for $205 million in cash.

Cynosure’s products include light-based energy systems (lasers) used by surgeons and dermatologists to perform non-invasive and minimally invasive procedures to remove hair, treat vascular and benign lesions, remove tattoos, revitalize skin, and reduce fat and cellulite.

Cynosure’s products are sold in the US and internationally – in more than 130 countries – under the brand names Cynosure, Palomar, ConBio and Ellman. The company has a direct sales force in the United States, Canada, France, Morocco, Germany, Spain, the United Kingdom, Australia, China, Japan and Korea, and also sells its products through international distributors.

Hologic acquired Cynosure for approximately $1.6 billion in March 2017. In FY2016, Cynosure had annual revenues of $433 million and an EBITDA of $48 million. In August 2018, Cynosure suspended the sale of its TempSure handpieces and single-use probes (estimated annual revenues of $40 million) in response to concerns from the FDA.

“Cynosure is a market leader with a comprehensive product portfolio and a track record of more than 25 years of science-driven healthcare innovation,” said Derek Strum, a partner at CD&R. “In addition to a targeted tuck-in acquisition strategy, we expect to continue to invest behind the company’s strong brand and large global installed base to accelerate growth via expanded sales and marketing efforts and bring new products and technologies to market that both enhance the company’s value proposition to its channel partners and improve clinical outcomes for end consumers.”

According to CD&R, medical aesthetics is a large market that is expected to experience strong future growth supported by the increasing importance of personal appearance as a result of the social media culture, technological developments in non-invasive procedures, a larger population of providers of aesthetic medical services, and the increasing awareness of aesthetic treatment options across demographics.

“The market for medical aesthetic devices is large and fragmented, with an attractive long-term outlook supported by strong demographic tailwinds, and Cynosure’s business model and channels align well with our extensive experience with similarly positioned consumer-medical device healthcare companies,” said Sandi Peterson, a partner at CD&R. “We believe this business is a great fit with CD&R’s strategy of helping corporate divisions transition to freestanding enterprises and implementing growth and productivity initiatives to accelerate their performance.”

Ms. Peterson is a former group worldwide chairman at Johnson & Johnson from 2012 to 2018 and earlier she held senior leadership positions at Bayer Medical, Medco Health Solutions, Nabisco and Whirlpool. When the buy of Cynosure closes, expected by the end of January 2020, Ms. Peterson will become the chairman of Cynosure’s board of directors.

New York and London-based CD&R invests in European and US-based businesses. Since founding in 1978, the firm has invested $28 billion in 86 companies across a range of industries numerous consumer health and medical device businesses.

UBS Investment Bank has committed to providing debt financing to support this transaction and is acting as the financial advisor to CD&R with Barclays and Credit Suisse also providing financial advice to the firm. Goldman Sachs is the financial advisor to Hologic.

Hologic (Nasdaq: HOLX) is a developer, manufacturer, and supplier of diagnostics products, medical imaging systems, surgical products and light-based aesthetic and medical treatment systems. The company is headquartered west of Boston in Marlborough, Massachusetts.

© 2019 Private Equity Professional | November 20, 2019

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