Cynosure Acquires Competitor, Plans Move
Westford-based cosmetic laser manufacturer Cynosure Inc. said it will acquire Palomar Medical Technologies, a major competitor, in a move that will eventually cause Cynosure to move its corporate headquarters to Burlington.
The two publicly traded companies have signed a definitive agreement for Cynosure to purchase Palomar, which is based in Burlington, for $294 million in cash and stock.
Complementary Pieces
Cynosure and Palomar have been pursuing some of the same customers for years, but each brings some complementary pieces to the deal, from their intellectual property portfolios to their global distribution networks.
Combined, the two have more than 80 sales reps in North America, direct distribution in nine foreign countries and third-party distribution in over 100. The companies have no debt and a combined balance of $87 million in cash. The deal will also result in up to $10 million in synergies by 2014, the companies said.
Cynosure makes light-based therapies and aesthetic lasers. In January, it won U.S. Food and Drug Administration approval for a cellulite treatment product called Cellulaze Workstation, sales of which helped drive profits in its recently ended fiscal year. It also received approval in December for a tattoo removal system called PicoSure.
Palomar also makes cosmetic lasers, but brings to the table its intense pulsed light technology, which is used for hair removal, and fractional technology, which is used to treat wrinkles and other skin conditions.
Both have been gaps in Cynosure's portfolio, Michael Davin, the company's president and CEO, said during an investor call Monday.
The Terms
Palomar had $55.4 million in sales during its recent fiscal year ended Dec. 31. That makes it just over a third the size of Cynosure, which had $153.5 million in sales over the same period.
Cynosure made $11 million in profit over the year, while Palomar had a loss of $6.2 million.
"We believe the acquisition of Palomar creates a substantial opportunity to generate profitable, long-term growth for our company and drive value for our stockholders," Davin said in the announcement.
Cynosure will pay Palomar shareholders $13.65 per share of common stock, a 23 percent premium over Palomar's average closing price. The purchase price will be divided up to $6.83 in cash and $8.83 in Cynosure common stock. Cynosure will issue approximately 5.2 million shares.
Davin will stay in his role as president and CEO, while Joe Caruso, Palomar's president and CEO, will assume the role of vice chairman and president.
Moving To Burlington
Cynosure has leased its Westford headquarters – a 67,500-square-foot building – for years. Its lease runs through 2018, executives said yesterday, but the company will move to Palomar's headquarters in Burlington, though it didn't say exactly when the move would occur. The company also has a facility in California and eight smaller locations in Europe and Asia.
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