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Laborie Medical Technologies to Acquire Cogentix Medical

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Cogentix Medical, Inc.  recently announced that it has entered a definitive merger agreement with Laborie Medical Technologies. Per the deal, Laborie Medical Technologies will buy all of the outstanding shares of Cogentix Medical for a net worth of $239 million. The company is a leading player in the Urology, Gynecology, and Colorectal fields

Cogentix Medical expects the transaction to close in the first half of the second quarter of 2018. Once completed, Cogentix Medical will become a wholly-owned subsidiary of Laborie Medical Technologies

Price Performance

Cogentix Medical’s shares have returned 92.7% in the past year, compared with the S&P 500 Index’s rally of 16.2%.

The stock has also outperformed its industry's gain of 25.4%. Cogentix Medical has a market cap of $177.24 million.

Cogentix Medical has a Zacks Rank #3 (Hold).

The Agreement in Detail

Per the terms of the agreement, Laborie Medical technologies will initiate a tender offer for all outstanding shares of Cogentix Medical’s common stock for $3.85 per share in cash. The company will execute the deal through its wholly-owned subsidiaries of LM US Parent, Inc. and Camden Merger Sub, Inc.

Following the successful completion of the tender offer, there will be a ‘second-step merger’ in which all the outstanding shares of Cogentix Medical’s common stock, which are not tendered, will be converted into the right to receive $3.85 per share of common stock, in cash. The transaction is subject to other customary closing conditions.

Notably, Cogentix Medical is a leading player in the global urology markets. The company’s recent initiative to sign a licensing agreement that will allow it to launch an Endo-Urology product line in the United States is noteworthy. This product is focused on minimally invasive treatment of kidney stones. Initial response of physicians to the product has been positive.

Per management, this latest transaction is also a great financial opportunity, which will deliver strong margin expansion over the long haul.

Market Potential

Per Markets & Markets, the urology devices market is estimated to reach a worth of $44.37 billion by 2022, at a CAGR of 7.1%. Considering the prospects in the niche space, we expect Cogentix Medical to gain solid prominence in the days to come.

However, the company faces stiff competition from MedTech giant Medtronic plc (MDT - Free Report) .

Key Picks

A few better-ranked stocks in the broader medical sector are PerkinElmer (PKI - Free Report) and Bio-Rad Laboratories (BIO - Free Report) .

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2 (Buy).

Bio-Rad Laboratories sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company has a long-term expected earnings growth rate of 20%.

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