Asahi Kasei to buy Zoll Medical for $2.2 billion

Bloomberg

Asahi Kasei Corp., a maker of synthetic fibers and industrial chemicals, has agreed to buy U.S. company Zoll Medical Corp. for $2.2 billion (¥181 billion) to expand its presence in the critical care products field and also to boost sales in Asia.

Asahi Kasei will pay $93 a share for Zoll Medical, which is based in Chelmsford, Massachusetts, and makes devices to help revive patients, the companies said in a statement Monday. That is 24 percent higher than Zoll’s closing price of $75.10 on Friday.

The acquisition will speed the Tokyo-based company’s expansion of its health care business that it aims to triple to ¥500 billion by 2020. Asahi Kasei said it will sell Zoll’s resuscitation devices and other products in Asia, as well as allowing access to the U.S. market as it seeks a share of the global critical care market estimated at $48 billion and growing at about 7 percent annually.

“This transaction will allow us to build on Zoll’s strong U.S. business position and its technology leadership, with Zoll forming the cornerstone of our critical care business,” Taketsugu Fujiwara, president of Asahi Kasei, said in the statement. “Together we will pursue new opportunities in the high-growth markets of Asia.”

The price offered by Asahi Kasei is 26 percent higher than Zoll’s average closing price over the 20 days through last Friday, lower than the 53 percent average premium for 19 similar-size acquisitions of health care product companies in the past five years, according to data compiled by Bloomberg.

Zoll Medical, founded in 1980 by three people, including heart specialist Paul M. Zoll, sells a removable defibrillator vest used for patients at risk of cardiac arrest.

The product, which had sales of $111 million in fiscal 2011, has strong potential for growth, Fujiwara said in a briefing in Tokyo on Monday.

Zoll’s net income rose 65 percent to $31 million in the year ended Oct. 2, according to Bloomberg figures.

Its sales have grown an average of 16 percent annually for the past 10 years on demand in North America, said Yasuyuki Yoshida, an executive at Asahi Kasei.

Japanese technology companies are seeking health care equipment businesses as ways to expand. Sales in the world’s 10 biggest markets for medical devices are estimated to grow 6.8 percent a year between 2010 and 2015 to reach $228 billion, according to MarketsandMarkets, a marketing research firm based in the U.S.

Fujifilm Holdings Corp. agreed to buy SonoSite Inc., a maker of portable ultrasound machines, for about $1 billion in December and proposed a partnership with Olympus Corp., the world’s biggest endoscope maker. Sony Corp. is also considering an investment in Olympus. Olympus recently admitted to huge accounting fraud.

Asahi Kasei signed a partnership with Zoll Medical and began selling its automated external defibrillator last August. The partnership led to the acquisition announced Monday, Yoshida said.