CryoLife Inc. plans to acquire privately held JOTEC AG for an upfront payment of $225 million, consisting of 75% in cash and 25% in CryoLife common stock issued to JOTEC's shareholders.
JOTEC is a German-based, privately-held developer of endovascular stent grafts, and cardiac and vascular surgical grafts, focused on heart repair.
CryoLife expects to finance the transaction and related expenses, as well as refinance its existing $69 million term loan, with new $255 million senior secured credit facilities, about $56.3 million in CryoLife common stock, and available cash on hand.
The credit facilities are fully underwritten by Deutsche Bank, Capital One and Fifth Third Bank, and are expected to be syndicated to investors before the deal closes.
Boards of both companies have approved the deal, which is expected to close later in 2017, subject to customary closing conditions.
Pat Mackin, CryoLife's chairman, president, and CEO, said the company plans to get the U.S. Food and Drug Administration's approval for JOTEC's products for entry into the U.S. market.
CryoLife also said that it will end its relationships with certain distributors as it has decided to distribute product through the combined company's direct sales channel. Due to this decision, at the end of the respective contract terms, CryoLife will buy back part of the inventory that was sold to the distributors, resulting in a $1.1 million third-quarter reversal of previously recorded revenues.
Vinson and Elkins is acting as lead legal counsel to CryoLife. Walder Wyss Ltd. is acting as lead legal counsel to JOTEC.