What happened
Shares of home healthcare equipment provider Apria (APR) were skyrocketing 26.2% higher as of 12:05 p.m. ET on Monday. The huge jump came after Owens & Minor (OMI -3.25%) announced plans to acquire Apria for around $1.45 billion.
So what
Owens & Minor offered $37.50 in cash per share for Apria. That's a 26% premium to the price of Apria's shares at the market close on Friday, and a 24% premium over Apria's 30-day volume-weighted average price. It's also only slightly below the all-time high for the healthcare stock.
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The acquisition appears to be good news, therefore, for Apria shareholders. But is it a smart move for Owens & Minor? Probably so.
Owens & Minor bought medical supply distributor Byram Healthcare in 2017. The addition of Apria should be a good fit with Byram's business. Owens & Minor will be in a stronger position to target the $50 billion home healthcare market.
From a financial perspective, acquiring Apria will be accretive to Owens & Minor's revenue; adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA); and earnings per share. The deal also diversifies Owens & Minor's revenue stream.
Now what
The transaction has already been unanimously approved by the boards of directors of both Owens & Minor and Apria. Two additional key hurdles remain -- the approval of Apria's shareholders and a green light from regulators. However, these hurdles shouldn't be hard to jump. The companies expect that the acquisition will close during the first half of this year.