Who says an old dog can’t learn new tricks? Nearly half a century into its lifetime, ConvaTec is still breaking new ground.
The U.K.-based maker of colostomy bags, catheters and other medical supplies is expanding its portfolio with its first foray into biologic wound-healing therapies, thanks to the proposed acquisition of Triad Life Sciences.
The Tennessee-based Triad has developed the FDA-cleared InnovaMatrix platform, which produces sheets of wound coverings derived from pig placenta, designed to speed up healing for ulcers and wounds from surgery and trauma, among other injuries.
With the buyout, Triad’s platform would join a range of bandages and dressings, wipes, negative-pressure therapy systems and more already under ConvaTec’s umbrella.
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Under the terms of the deal, ConvaTec will pay $125 million upfront to acquire Triad, which as a subsidiary would be eligible to earn two potential payments of $25 million each if it hits certain short-term milestones. In the longer term, Triad could rake in up to $275 million more across two tranches based on its financial performance, at the end of the first and second years after the acquisition.
That brings the total deal size to $450 million, by far the largest of ConvaTec’s acquisitions in recent years.
And the company is expecting a hefty payout to match the high sticker price, with the buyout forecasted to have an immediate positive impact on ConvaTec’s sales. Additionally, by the third year, returns from the acquisition are expected to outstrip the company’s cost of capital, as it taps into what it describes as a $1.8 billion global market for biologic wound dressings.
Though the deal is still subject to sign-off from regulators and other closing conditions, the companies are aiming to sew it up by the end of the first quarter of this year.
“Today’s announcement marks another successful step in our strategic intent of pivoting to sustainable and profitable growth. This transaction will strengthen our wound care business and enable ConvaTec to enter the rapidly growing wound biologics segment,” ConvaTec CEO Karim Bitar said in a statement. “Triad Life Sciences has innovative and differentiated products and an exciting pipeline which is consistent with our vision: pioneering trusted medical solutions to improve the lives we touch.”
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The acquisition offer comes just a few months after Triad raised about $17.5 million in an August funding round, supported by a handful of Australia-based institutional investors. At the time, the company said it would pursue a public debut, aiming to list on the Australian Securities Exchange sometime in the ensuing months.
Instead, it ended up taking a bit of a shortcut to the public stage by joining ConvaTec, which in 2016 racked up the biggest initial public offering of the year—with a haul of about $1.8 billion—to begin trading on the London Stock Exchange as “CTEC.”