(By Balaseshan) Invacare Corp. (NYSE: IVC), a maker of medical equipments used in home, said it has agreed to sell its domestic medical supplies business to AssuraMed for $150 million.
This divestiture of Invacare Supply Group (ISG) is consistent with Invacare's focus on its globalization strategy to harmonize core global product lines and reduce complexity within its business. While expected to be initially dilutive, this divestiture is consistent with Invacare's globalization strategy.
For AssuraMed, which focuses in wholesale and home-delivered medical supplies across the United States, this strategic purchase allows the company to strengthen its position as a leader in the medical supplies industry.
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Invacare preliminarily estimates that it will realize net proceeds from the sale of the ISG business of about $140 million, net of tax and expenses. In the near term, Invacare plans to use the proceeds to strengthen its balance sheet and reduce debt outstanding under its revolving credit facility.
As previously disclosed by Invacare, net sales for the ISG business were about $299.5 million for 2011 and $246.4 million for the first nine months of 2012. Earnings before income taxes were about $8.0 million for 2011 and $5.1 million for the first nine months of 2012.
"This divestiture represents a significant step forward for Invacare and it allows us to continue to reduce complexity in our business, focus on our core product lines and expand globally, with the long-term goal of returning operating margins back to high single digits," said Gerald Blouch, Invacare President and Chief Executive Officer.
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The transaction is expected to close in early 2013. Jefferies & Co. Inc. acted as financial adviser and Calfee, Halter & Griswold LLP acted as legal adviser to Invacare in the transaction.
IVC is trading down 0.57% at $15.65 on Friday. The stock has been trading between $12.87 and $19.25 for the past 52 weeks.