Biotech Values

[DewDiligence]

Cosmetic-Laser Consolidation: ELOS Buys CLZR for $2.84/sh in Stock

[The nominal deal price is a 51% premium to CLZR’s close yesterday but there is no collar, so the effective premium could shrink. ELOS shareholders will own 80% of the merged company and CLZR shareholders will own 20%.]

http://finance.yahoo.com/news/Syneron-Medical-Ltd-and-bw-2649563232.html?x=0&.v=1

›Syneron Medical Ltd. and Candela Corporation to Merge Creating a Leading Global Aesthetic Device Company

Combination of Syneron and Candela creates the most comprehensive aesthetic device product portfolio in the industry — and advances Syneron’s presence in international markets and among core physicians

Wednesday September 9, 2009, 5:00 am EDT

YOKNEAM, Israel & WAYLAND, Mass.--(BUSINESS WIRE)--Syneron Medical Ltd. (NASDAQ: ELOS) and Candela Corporation (NASDAQ: CLZR) announced today that they have entered into a definitive agreement to combine the companies in an all stock transaction. This strategic combination, unanimously approved by the Boards of Directors of both companies, will create a global leader in medical aesthetic devices. The transaction is expected to be completed by year-end 2009.

Under the terms of the merger agreement, Candela shareholders will receive 0.2911 ordinary shares of Syneron for each share of Candela common stock they own. Based upon the closing stock price of Syneron common stock on September 8, 2009, this represents $2.84 per share of consideration to be received by Candela shareholders, or a total consideration of approximately $65 million. The consideration represents a premium of approximately 51% to the closing stock price of Candela common stock on September 8, 2009. It is anticipated that the transaction will be tax free to Candela shareholders. Syneron shareholders will retain their shares.

“The combination of Syneron and Candela brings together two well-respected industry leaders in aesthetic medical devices,” said Louis P. Scafuri, Chief Executive Officer of Syneron. “The product portfolio and commercial infrastructure of Syneron and Candela are highly complementary. The combined company will be extremely well positioned to benefit from an improving macroeconomic climate. We are going to take our time to build the right customer-focused organization for long-term growth and market leadership. At this initial stage, we are less concerned with driving immediate synergies that might risk disruption and compromise our ability to take advantage of the opportunities ahead.”

Scafuri continued, “Candela has been a pioneer in our industry for nearly 40 years. We highly respect the achievements of Candela’s leadership team and look forward to welcoming Candela’s world-class sales force and product development organizations to Syneron where they will play a crucial role in our future success. We are committed to maintaining the integrity of the Candela brand and its long standing reputation for quality, efficacy and unparalleled customer support. I would like to recognize the Syneron team for enabling us to be in a position to take this important step in the development of our company.”

“This transaction is a positive outcome for our shareholders, employees and customers,” said Gerard E. Puorro, President and CEO of Candela. “This combination creates an industry global leader with the critical mass, product portfolio, culture of innovation and financial strength required to succeed in the current market environment. The transaction provides our shareholders with attractive value today, as well as an opportunity to participate in the long-term prospects of the combined company.”

The new company will have proforma annualized revenue totaling over $180 million, based on the quarter ended June 30, 2009, ranking it among the leading medical aesthetic device companies in the industry. The combined company will have a global presence, with approximately 62% of revenue generated from outside the United States, as well as a balanced customer mix between “core physicians” (dermatologists and plastic surgeons) and “non-core physicians” with an approximate split of 55% core and 45% non-core. The company expects to generate a meaningful amount of recurring revenue in the future, with Candela’s service revenue complementing Syneron’s recently announced initiative to shift toward a consumables-oriented business model. The combined company will have significant financial strength, with more than $240 million in cash and no debt on a proforma basis as of June 30, 2009.

Fabian Tenenbaum, Syneron’s Chief Financial Officer, noted, “In the challenging recent economic environment, both companies have dramatically reduced operating expenses, which positions the combined company, post integration, to be profitable and the transaction to be accretive to our earnings as market conditions normalize.”

Transaction Terms

Under the terms of the merger agreement, Candela shareholders will receive 0.2911 shares of Syneron ordinary share for each share of Candela common stock they own. Syneron will issue 6.7 million shares to acquire Candela. Upon completion of the transaction, Syneron shareholders will own approximately 80 percent of the combined company and Candela shareholders will own approximately 20 percent.

Syneron will maintain its corporate headquarters in Israel and North American office in Irvine, CA. Candela will operate as a wholly-owned subsidiary of Syneron and maintain their offices in Wayland, MA, as well as subsidiary operations in Australia, France, Germany, Italy, Japan, Portugal, Spain and the United Kingdom.

Following the close of the transaction, Louis P. Scafuri will remain Chief Executive Officer of the combined company and Dr. Shimon Eckhouse will remain Chairman of the Board of Directors. Gerard E. Puorro will join Syneron’s Board of Directors. The management team for the combined company will be comprised of executives from each organization.

The transaction is subject to approval of Candela’s shareholders as well as customary closing conditions and necessary anti-trust approvals. The transaction is expected to close by year-end 2009.

Advisors

In connection with the transaction, Leerink Swann LLC is acting as exclusive financial advisor to Syneron, with Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. and Morrison & Foerster LLP serving as its legal counsel. Houlihan Lokey is acting as exclusive financial advisor to Candela, and Goodwin Procter LLP is legal counsel.

Conference Call and Webcast

Syneron and Candela management will host a conference call and a live webcast today, Wednesday, September 9 at 8:30 a.m. (ET) to discuss the transaction. Interested participants may participate in the conference call on the following dial-in numbers:

US (toll free): 866-835-8906

International: 703-639-1413

Investors and other interested parties can also access a live webcast of the conference call through the Investor Overview page on Syneron's website at www.syneron.com or Candela’s website at www.candelalaser.com under Investor Relations. Please log in at least 10 minutes prior to the conference call in order to download the applicable audio software. Following the conclusion of the call, a replay of the webcast will be available within 24 hours on both websites.

About Syneron Medical Ltd.

Syneron Medical Ltd. (NASDAQ: ELOS - News) manufactures and distributes medical aesthetic devices that are powered by the proprietary, patented elos combined-energy technology of Bi-Polar Radio Frequency and Light. The Company's innovative elos technology provides the foundation for highly effective, safe and cost-effective systems that enable physicians to provide advanced solutions for a broad range of medical-aesthetic applications including hair removal, wrinkle reduction, rejuvenating the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. are located in Israel. Syneron has offices and distributors throughout the world, including North American headquarters in Irvine, CA, and Asia-Pacific headquarters in Hong Kong, which provide sales, service and support. Additional information can be found at www.syneron.com.

About Candela Corporation

Candela Corporation manufactures, and distributes innovative clinical solutions that enable physicians, surgeons, and personal care practitioners to treat selected cosmetic and medical conditions using lasers, aesthetic laser systems, and other advanced technologies. Founded near Boston in 1970, the company markets and services its products in 86 countries from offices and distributors in the United States, Europe, Japan, China and other Asian locations. Candela established the aesthetic laser market 20 years ago, and currently has an installed base of over 14,000 systems worldwide. Visit Candela on the Web at http://www.candelalaser.com.‹