Defibrillator maker gains cash & Asian access
On April 26, Japanese company Asahi Kasei Corporation completed the acquisition of ZOLL Medical Corporation for $2.2 billion, confirmed ZOLL President Jonathan A. Rennert. He says the deal with Asahi Kasei is unlike many acquisitions because there was no consolidation or spin-off. ZOLL was not a broken business. Instead, the sale “was based on the positive aspects of performance,” he says.
The relationship between ZOLL and Asahi Kasei began as the Tokyo-based company embarked on an initiative called “Healthcare for Tomorrow.” Asahi Kasei partnered with ZOLL to distribute product in Asia. According to ZOLL Senior Vice President and Vice President of Marketing Ward M. Hamilton, the partnership was built on a certain synergy. Japan is the second most advanced market in the world regarding resuscitation. Plus, there was a clear mutual admiration. “They liked us so much, they bought us,” he says.
Asahi Kasei is Japan’s leading diversified chemical manufacturer with businesses in healthcare; chemicals and fibers; homes and construction materials; and electronics. It’s no stranger to the U.S., with a presence in several of its core industries, including the medical sector. Asahi Kasei Medical America Inc., based in Memphis, is a manufacturer of blood purification and plasma therapy products.
Rennert explains that $1.5 billion of Asahi Kasei’s $20 billion in annual sales is in medical and pharmaceutical sectors, making it three times the size of ZOLL in this field alone. “They’re not a small player in the world of healthcare,” he says. In fact, Asahi Kasei sees healthcare as a significant strategic opportunity, particularly in places such as India and China. “They’re trying to transform their company and they’re looking to ZOLL to help,” he says.
Asahi Kasei paid $93 a share for the Chelmsford (Mass.)-based company. According to Bloomberg, that is 26% higher than ZOLL’s closing price of $75.10 on March 9. Once the deal was announced, however, ZOLL’s stock rose to $92.94 by the close of New York trading. Asahi Kasei’s stock also rose, although not as dramatically, just 0.2% to close at 518 yen.
ZOLL Medical was founded in 1980 by cardiologist Paul M. Zoll, MD, and two others, to sell a non-invasive temporary pacemaker based on Zoll’s research. Net income from sales of external defibrillators, as reported by Bloomberg, was $31 million in the year end report issued Oct. 2, 2011.
Rennert says that, because there is no integration or overlap involved in the acquisition, there will be no changes to the management, workforce or manufacturing. All of the company’s facilities will remain in the U.S. “We are a wholly owned subsidiary, but we are still an American-based business,” he says. “We are the same people. We just have a different owner.”
What Asahi Kasei brings to ZOLL, says Hamilton, is more money for research, business development, additional production-to-distribution channels, better support for customers in the clinical arena and a broader, more comprehensive set of products. “A lot of this is still an empty canvas–we’re still planning, but the reservoir is larger. This makes us stronger. We can do more of what we do well,” he says.