What: Shares in Lumenis Ltd. (NASDAQ: LMNS) climbed by 13% earlier today after the company announced that it will be acquired by the private equity firm XIO Group for $14 per share in cash.
So What: XIO Group is a Hong Kong based private equity firm with over $3 billion in capital under management and although the private equity firm focuses primarily on Asia, Lumenis Ltd.'s medical laser products are available in more than 100 countries.
Lumenis Ltd.'s surgical products are used in prostate surgery and ENT procedures, its aesthetics products resurface skin and reduce scarring, and its ophthalmology products treat conditions including glaucoma.
The acquisition, which is valued at $510 million, is expected to close in September.
Now What: In the first quarter, Lumenis Ltd.'s sales totaled $68.5 million, up 10.6% on a constant currency basis.
Sales growth came thanks to 20.7% ex-currency growth in its aesthetics business and 8.9% ex-currency growth in its surgical segment. Sales in the company's ophthalmology segment slipped 4.5% year-over-year during the quarter.
The Asia Pacific market -- XIO Group's wheelhouse -- grew by 26.1% on a constant currency basis.
Based on Lumenis Ltd.'s forward P/E of 17, it appears that XIO Group is paying a fair price to acquire it and another bidder may be unlikely to materialize given that XIO Group has already lined up support from investors controlling 59% of Lumenis Ltd.'s stock.
Since the deal is all cash, there seems to be little reason to hold onto Lumenis Ltd.'s shares, other than for the small arbitrage opportunity (shares are currently trading at $13.73). However, if you're a Lumenis Ltd. investor that would love to get an opportunity to own shares again, you may want to keep an eye on XIO Group. Often, private equity firms like XIO Group take companies like Lumenis Ltd. private in order to improve them, and then they bring them public again in a few years, so stay tuned!
