COMMUNIQUÉ: CryoLife announces that it has reached a definitive agreement to acquire JOTEC (1)

CryoLife announces that it has reached a definitive agreement to acquire 

 a leading tissue and medical products processing company dedicated to cardiac and vascular surgery, today announced that it has signed a definitive agreement to acquire JOTEC AG (” JOTEC “). JOTEC, based in Germany, is a private developer of technologically differentiated endovascular stent grafts and cardiac and vascular surgical grafts, focused on aortic repair. The combination of CryoLife and JOTEC will lead to a company with a broad and highly competitive product portfolio focused on aortic surgery and will place CryoLife in a position where it will be able to compete from a strong position in the growing and important endovascular surgical markets.

Pat Mackin, president and CEO of CryoLife, said: “We believe that this acquisition will allow CryoLife to maintain a steady revenue growth of slightly less than 10%, while diversifying our revenues into a potentially larger market.” JOTEC has a portfolio of technologically differentiated products that meet the needs of the international market for stent grafts, valued at US $ 2000 million, which are used for endovascular and open aortic repairs.Their advanced portfolio of products has allowed them to achieve an annual growth rate of 17%. % during the last five years, which significantly exceeds the growth of the general European market, we expect the acquired portfolio to continue to grow more than 10% outside the United States, at least for the next five years. will take advantage of our i Global infrastructure, will accelerate our ability to enter directly into Europe and will foster significant cross-selling opportunities between the CryoLife and JOTEC product portfolios. The transaction will also boost gross margin expansion and accelerate our trajectory to achieve an operating margin of 20% or more. We are confident that this will place CryoLife in a position that will allow it to generate growth in GAP, outside of generally accepted accounting principles, at an annual growth rate of at least 20% over the next five years. “

Mr. Mackin added: “We also hope that JOTEC’s new product lines and R & D capabilities will drive long-term growth beyond a five-year time horizon, especially as its most innovative products enter the US market Our plan is to make use of CryoLife’s clinical and regulatory expertise for the US Food and Drug Administration (FDA) to authorize our products, which we believe will allow them to enter the US market. U.S.

Thomas Bogenschütz, CEO of JOTEC, said: “CryoLife is in an ideal position to accelerate the adoption of our products through its complementary and international cardiac and vascular surgery activities, and we look forward to working with the CryoLife team to promote the growth of our existing activities, expand to new territories and accelerate our R & D initiatives in key markets such as the United States.

JOTEC generated revenues of around 41 million euros in 2016, which represents an annual growth of around 17% over the last five years. It also generated revenues of about 43 million euros, about 51 million US dollars according to the current exchange rate, during the twelve months prior to June 30, 2017.

Strategic justification of the transaction

– Provide CryoLife with: – A portfolio of technologically advanced and highly competitive products that is gaining market share – A new and important product line and excellent R & D capabilities – Drivers for revenue growth short and long term until 2028; and – Access to the United States stent graft market, valued at USD 1,200 million, which is expected to increase to USD 1,500 million by 2021. – Expansion of the potential markets of CryoLife through access to the market. current international market for stent grafts, valued at US $ 2 billion, and which is expected to increase to US $ 2.5 billion by 2021. – Acceleration of CryoLife’s direct sales strategy in the main European markets – Creation of important cross-selling opportunities by taking advantage of the direct sales companies that already have CryoLife and JOTEC – Boosting expected revenue growth (slightly lower than 10%), increasing gross margin and obtaining an operating margin of 20% greater over a period of five years

Terms of agreement

Terms of agreement

In accordance with the terms of the final agreement, CryoLife will acquire JOTEC after an initial payment of US $ 225 million, subject to certain adjustments, which will consist of 75 percent in cash and 25 percent in ordinary shares of CryoLife issued in favor of the shareholders of JOTEC. CryoLife expects to finance the transaction and the related expenses, as well as refinance its loan in installments in the amount of US $ 69 million, thanks to a guaranteed loan of 255 million US dollars, which consists of an official loan in installments (loan of class B) of 225 million dollars and an unused revolving line of credit of 30 million dollars, 56.25 million in ordinary shares of CryoLife and money available in cash. The guaranteed loans are fully covered by Deutsche Bank, Capital One and Fifth Third Bank and are expected to be linked to the investors before the closing of the acquisition.

Both companies, as well as their corresponding boards of directors, have approved the final agreement. The transaction is expected to be completed by the end of this year, subject to the usual closing conditions.