WESTFORD, Mass. and
BURLINGTON, Mass., March 18, 2013 /PRNewswire/ -- In a
transaction that creates one of the world's premier aesthetic laser
and light-based companies, Cynosure, Inc. (NASDAQ: CYNO) and
Palomar Medical Technologies, Inc. (NASDAQ: PMTI) today announced
that they have signed a definitive agreement, pursuant to which
Cynosure will acquire Palomar in a cash and stock transaction
valued at approximately $294
million.
"We believe the acquisition of Palomar creates a substantial
opportunity to generate profitable, long-term growth for our
Company and drive value for our stockholders," said Michael Davin, Cynosure's Chairman and Chief
Executive Officer. "Combining with Palomar complements our
product portfolio and customer base, adding new product and service
revenues, strengthening our global distribution network, creating
new cross-selling opportunities and enhancing our intellectual
property position with the addition of more than 40 patents."
"Beyond our strategic rationale for acquiring Palomar, we also
are excited about the benefits of bringing together two
organizations built on a commitment to meaningful innovation,"
Davin said. "Palomar products such as the Icon and Starlux
Laser and Intense Pulsed Light (IPL) Platforms and the recently
introduced Vectus Diode Laser for permanent hair reduction have
established Palomar's reputation for excellence around the world.
This commitment is also reflected in proprietary technology that
enables physicians to ensure patient safety and comfort through
advances in intelligent energy delivery, skin cooling, and
temperature control."
Cynosure and Palomar, both based in Massachusetts, have a total combined installed
base of more than 20,000 aesthetic laser systems worldwide, with a
distribution network that spans over 100 countries. The combined
revenue of the two companies in calendar year 2012 was more than
$234 million with 52% of product
revenue coming from North America
and 48% originating from the international markets.
"Our board of directors and management team believe that this
transaction makes strategic sense for our company, offers an
attractive premium to our shareholders and creates exciting
opportunities for our employees," said Joseph Caruso, Chairman, President and Chief
Executive Officer of Palomar. "Both companies share the same
passion for innovation, and this combination creates a single,
unified organization that is positioned for continued success."
Transaction Terms
Palomar shareholders will receive $13.65 per share of Palomar common stock:
$6.825 per share in cash and
$6.825 per share in Cynosure common
stock (subject to adjustment and collar provisions described in the
definitive agreement). Cynosure will issue approximately 5.2
million shares in the transaction and fund the approximately
$147 million in cash consideration
through existing cash balances.
The acquisition price of $13.65
represents a premium of approximately 23% above Palomar's average
closing price and a premium of approximately 34% over Palomar's
average enterprise value (excluding cash) since the announcement of
Palomar's 2012 year-end results on February
7, 2013.
The acquisition is expected to be accretive to Cynosure in
calendar 2014 with the implementation of $8
million to $10 million in projected synergies. The
combined company will have approximately $87
million in cash and no debt on a pro forma basis for the
transaction as of December 31, 2012.
The transaction has been unanimously approved by the board of
directors of each company and is expected to close in the third
quarter of 2013.
The transaction is subject to customary closing conditions,
including Cynosure and Palomar shareholder approval and regulatory
approvals. It is anticipated that the transaction will be tax
free to Palomar shareholders with respect to the stock component of
the deal consideration. Upon completion of the transaction,
Cynosure shareholders will own approximately 77% and Palomar
shareholders will own approximately 23% of the combined
company.
Upon completion of the transaction, Davin will serve as Chairman
and Chief Executive Officer; Caruso will join Cynosure's Board of
Directors as Vice Chairman and will serve as President; and
Timothy Baker will serve as EVP,
Chief Operating Officer and Chief Financial Officer. Cynosure
ultimately plans to relocate its headquarters from Westford, Massachusetts to Palomar's owned
facility 15 miles away in Burlington,
Massachusetts.
"We look forward to welcoming the Palomar team to Cynosure,"
Davin said. "We envision a smooth transition and integration
that will achieve the full operational and financial benefits of
this combination for our customers, employees and
shareholders."
Leerink Swann served as Cynosure's financial advisor on the
transaction and Hinckley, Allen & Snyder served as legal
counsel. Canaccord Genuity served as Palomar's financial
advisor and WilmerHale served as legal counsel.
Conference Call / Webcast
In conjunction with this announcement, management will host a
conference call for financial analysts and investors at
9:00 a.m. ET today. Those who wish to
listen to the conference call webcast should visit the "Investor
Relations" section of Cynosure's website at www.cynosure.com or the
"Investors" section of the Palomar website at
www.palomarmedical.com. The live call also can be accessed by
dialing (877) 709-8155 or (201) 689-8881. If you are unable to
listen to the live call, the webcast will be archived on the
companies' websites.
About Cynosure
Cynosure develops and markets aesthetic treatment systems that
are used by physicians and other practitioners to perform
non-invasive and minimally invasive procedures to remove hair,
treat vascular and pigmented lesions, remove multi-colored tattoos,
rejuvenate the skin, liquefy and remove unwanted fat through laser
lipolysis, reduce cellulite and treat onychomycosis. Cynosure's
products include a broad range of laser and other light-based
energy sources, including Alexandrite, pulse dye, Q-switched,
Nd:YAG and diode lasers, as well as intense pulsed light. Cynosure
was founded in 1991. For corporate or product information, visit
Cynosure's website at www.cynosure.com.
About Palomar
Palomar designs, produces and sells the most advanced cosmetic
lasers and intense pulsed light (IPL) systems to dramatically
improve the appearance of women's and men's skin. For over 15
years, Palomar has pioneered the science of using lasers and light
to improve appearances. As the industry's technology leader,
Palomar has invested in creating cosmetic laser and IPL systems
that put real value in the hands of physicians and other
professionals to benefit consumers. Thousands of physicians
worldwide trust and depend on Palomar technology to not only
introduce new aesthetic treatments such as advanced laser hair
removal, laser liposuction, skin resurfacing, acne, laser
treatments for scars, wrinkle treatment, stretch marks (striae),
and photofacials for pigmented and vascular lesions, but to also
make them robust, faster, more powerful, and more comfortable for
those being treated. In June 2009,
Palomar became the first company to receive a 510(k)
over-the-counter ("OTC") clearance from the FDA for a new,
patented, home-use, laser device for the treatment of fine lines
and wrinkles around the eyes (periorbital wrinkles). This OTC
clearance allows the PaloVia® Skin Renewing
Laser® to be marketed and sold directly to consumers
without a prescription. For more information on Palomar and
its products, visit Palomar's website at www.palomarmedical.com for
professional products or palovia.com for consumer products.
Safe Harbor Statement
With the exception of the historical information contained in
this release, the matters described herein contain forward-looking
statements, including, but not limited to, statements relating to
long-term growth and profitability, the expectation of an accretive
transaction to Cynosure in calendar 2014 with the implementation of
$8 million to $10 million of
projected synergies, the tax-free nature of the transaction and the
timing of the closing of the transaction. These
forward-looking statements are neither promises nor guarantees, but
involve risk and uncertainties that may individually or mutually
impact the matters herein, and cause actual results, events and
performance to differ materially from such forward-looking
statements. These risk factors include, but are not limited to,
results of future operations, difficulties or delays in developing
or introducing new products and keeping them on the market, the
results of future research, lack of product demand and market
acceptance for current and future products, adverse events, product
changes, the effect of economic conditions, challenges in managing
joint ventures and research with third parties, the impact of
competitive products and pricing, governmental regulations with
respect to medical devices, including whether FDA clearance will be
obtained for future products and additional applications, the
results of litigation, difficulties in collecting royalties,
potential infringement of third-party intellectual property rights,
factors affecting future income and resulting ability to utilize
NOLs, difficulties in combining the operations of Cynosure and
Palomar, failure to receive approval from the stockholders of
Palomar or Cynosure or to satisfy other conditions to the parties'
obligations to complete the merger, failure to receive regulatory
approvals for the merger, the effects of disruption from the merger
making it more difficult to maintain relationships with employees,
licensees, customers, suppliers or other business partners or
governmental entities, the ability of Cynosure to successfully
integrate Palomar's operations and employees, the ability to
realize anticipated synergies and cost savings, other business
effects, including the effects of industry, economic or political
conditions outside of the parties' control, transaction costs,
actual or contingent liabilities, the risk that competing offers
for Palomar will be made and/or other factors, which are detailed
from time to time in Cynosure's and Palomar's SEC reports,
including their reports on Form 10-K for the year ended
December 31, 2012 and any
subsequently filed quarterly reports on Form 10-Q. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. Neither
Cynosure nor Palomar undertakes any obligation to release publicly
the result of any revisions to these forward-looking statements
that may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Additional Information about the Proposed Transaction and
Where to Find It
In connection with the proposed transaction, Cynosure intends to
file with the Securities and Exchange Commission (SEC) a
Registration Statement on Form S-4 that will include a joint proxy
statement of Cynosure and Palomar that also constitutes a
prospectus of Cynosure. Palomar and Cynosure also plan to file
other relevant documents with the SEC regarding the proposed
transaction. INVESTORS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. You may obtain a free copy of the joint
proxy statement/prospectus (if and when it becomes available) and
other relevant documents filed by Cynosure and Palomar with the SEC
at the SEC's website at www.sec.gov. You may also obtain these
documents by contacting Cynosure's Investor Relations Department at
(617) 542-5300 or CYNO@investorrelations.com, or by contacting
Palomar's Investor Relations Department at (781) 993-2411 or
ir@palomarmedical.com.
Cynosure and Palomar and their respective directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information about
Cynosure's directors and executive officers is available in
Cynosure's proxy statement dated March 30,
2012 for its 2012 Annual Meeting of Stockholders and its
Current Report on Form 8-K dated November
21, 2012. As of March 15,
2013, Cynosure's directors and executive officers
beneficially owned approximately 2.86 million shares, or 17.7%, of
Cynosure's common stock. Information about Palomar's
directors and executive officers is available in Palomar's proxy
statement dated April 4, 2012 for its
2012 Annual Meeting of Stockholders. As of March 15, 2013, Palomar's directors and executive
officers beneficially owned approximately 2.7 million shares, or
13.6%, of Palomar's common stock. In addition, in connection
with the execution of the definitive agreement relating to the
merger, Caruso entered into (1) with Palomar, an amendment to his
existing employment agreement with Palomar that will become
effective at the closing of the merger and that provides for (among
other things) payment by Palomar of 110% of his retention bonus
(which is equal to the sum of (a) three times his annual
compensation (including 2013 salary and last paid bonus), plus (b)
a pro rata portion of his bonus payable with respect to 2013)), 75%
of which will be paid within ten days after the closing of the
merger and 35% of which will be paid one day prior to the first
anniversary of the closing of the merger and (2) with Cynosure, a
new employment agreement that will become effective at the closing
of the merger and that provides for, among other things, a
three-year term of employment with Cynosure, subject to two-year
extensions (unless terminated by either party not less than 12
months prior to the end of the then-current term), an initial
annual base salary of $465,000, a
target performance bonus that is between the target performance
bonus established for Cynosure's Chief Executive Officer and Chief
Financial Officer and certain benefits upon a termination of
employment by Cynosure without "cause" (after the first 12 months
of the initial term), by Caruso for "good reason" or by either
party following a "change of control" (each as defined in the new
employment agreement). Also in connection with the execution
of the definitive agreement relating to the merger, Paul Weiner, Palomar's Chief Financial Officer,
entered into a letter agreement with Palomar that will become
effective at the closing of the merger and that amends his existing
employment agreement with Palomar to (i) provide that amounts
payable to Weiner upon a change of control of Palomar will be paid
within 10 days after the closing of the merger and (ii) narrow the
scope of the restrictive covenants applicable to Weiner.
Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC regarding the merger when they become
available. Investors should read the joint proxy
statement/prospectus carefully when it becomes available before
making any voting or investment decisions. You may obtain free
copies of these documents from Cynosure or Palomar using the
sources indicated above.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of
the U.S. Securities Act of 1933, as amended.
Contacts:
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Scott
Solomon
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Kerry
McAnistan
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Vice
President
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Investor
Relations Assistant
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Sharon
Merrill Associates, Inc.
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Palomar
Medical Technologies, Inc.
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617.542.5300
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781-993-2411
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cyno@investorrelations.com
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ir@palomarmedical.com
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SOURCE Cynosure, Inc.