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Why ICU Medical Stock Is Jumping Today

By Cory Renauer – Sep 8, 2021 at 4:17PM

Key Points

  • ICU Medical will acquire Smiths Medical for around $2.3 billion in cash and stock.
  • The terms include $1.85 billion in cash, 2.5 million new shares, and a $100 million earn-out based on ICU Medical's stock price.

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A leading manufacturer of intravenous therapy solutions is about to get a lot bigger.

What happened

Shares of ICU Medical (ICUI -1.91%), a medical device company specializing in intravenous treatment solutions, were on the move today following the announcement of a cash and stock deal for Smiths Medical. The market signaled its approval of the pending acquisition by pushing the stock 26.2% higher on Wednesday.

So what 

Smiths Medical is a U.S.-based component of Smiths Group (SMGZY 0.10%), a British conglomerate that manufactures airport baggage scanners and industrial equipment. Smiths Group's medical division never quite fit in with the rest of its portfolio, but it should do well in ICU Medical's hands.

Smiths Medical manufactures dozens of medical products, such as positive airway pressure systems and syringe pumps. With a larger line of related products, ICU Medical can become more of a one-stop shop for busy hospital administrators.

Happy investor in front of an upward sloping arrow.

Image source: Getty Images.

Smiths Group will receive $1.85 billion in cash from ICU Medical, plus 2.5 million newly issued shares. There's also an extra $100 million in consideration, contingent upon ICU Medical's stock price averaging $300 per share for a 30-day period over the next three years.

Now what

The deal is expected to close before the end of the year. I would be surprised if regulators on either side of the Atlantic tried to block the transaction.

ICU Medical expects adjusted earnings before interest taxes depreciation and amortization from Smiths Medical to come in at around $190 million next year. ICU Medical also thinks it can squeeze out around $50 million a year in cost synergies.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

ICU Medical Stock Quote
ICU Medical
ICUI
$153.20 (-1.91%) $-2.99
SMITHS GROUP PLC ADR Stock Quote
SMITHS GROUP PLC ADR
SMGZY
$19.30 (0.10%) $0.02

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