Acquistion news..
BETHESDA, Md., April 5 /PRNewswire/ -- Hanger Orthopedic Group, Inc. (NYSE: HGR) and NovaCare, Inc. (NYSE: NOV) today entered into a definitive agreement under which Hanger Orthopedic will purchase the NovaCare Orthotics & Prosthetics, Inc. subsidiary of NovaCare, Inc. The transaction will create the leading provider of orthotic and prosthetic patient-care services in the United States. The company will retain the Hanger name and will remain headquartered in Bethesda, MD. After the transaction, Hanger Orthopedic will have approximately 625 patient-care centers and over 950 certified practitioners in 42 states. Under the terms of the agreement, which have been approved unanimously by the Boards of Directors of both companies, Hanger Orthopedic Group will pay NovaCare, Inc. $455 million, including the assumption of seller notes (expected to be approximately $38 million at closing).
On a pro forma basis for 1998, including a full-year effect of acquisitions, the combined company would have had revenues of $486 million and earnings before interest, taxes, depreciation and amortization of $80 million (before merger synergies). The company expects the transaction will be non-dilutive to Hanger's 1999 estimated earnings per share, will be approximately 10% accretive to its 2000 EPS, and will accelerate the company's long-term EPS growth rate.
"The merger of our company and NovaCare's O&P division establishes Hanger as the clear-cut industry leader," said Ivan Sabel, the CEO of Hanger Orthopedic. "The combined company will operate as a fully integrated O&P provider offering patient care, manufacturing and distribution services. We expect this combined platform to provide exceptional earnings per share growth opportunities over the next several years."
Ivan Sabel will be the CEO of the combined company and Ron Hiscock, President of NovaCare Orthotics & Prosthetics, Inc., will be President and Chief Operating Officer of the combined company. The Chief Financial Officer of the combined company will be Richard Stein, the current CFO of Hanger. The balance of the management team of the combined company will be composed of members of both companies' management teams. Hanger's Board of Directors will remain unchanged. "Hanger is delighted to be combining its management team with that of NovaCare O&P," said Mr. Sabel. "Ron Hiscock and his management group have done an exceptional job establishing their company as a leader in the industry."
The orthotic and prosthetic services industry is a $2 billion segment of the overall orthopedic rehabilitation industry. Both Hanger and NovaCare operate O&P patient-care centers staffed by orthotists and prosthetists, medical professionals who design, fabricate, fit and supervise the use of external musculoskeletal support devices and artificial limbs. In addition to patient-care services, Hanger Orthopedic manufactures custom-made and prefabricated O&P devices and is the largest distributor of O&P components and finished O&P patient-care products in the United States. Hanger has acquired over 75 O&P practices since 1986.
"We are very pleased with this transaction," said Timothy E. Foster, NovaCare's Chief Executive Officer. "NovaCare will realize a substantial gain. Our employees will be joining a company with a long-term commitment to the orthotics and prosthetics industry, with significant national presence, and able to take advantage of economies of scale and national contracting opportunities."
The total purchase price will be $455 million, including the assumption of seller notes (expected to be approximately $38 million at closing). Hanger expects to finance the transaction by means of a fully committed $300 million bank credit facility, a $150 million private offering of debt securities, and a fully committed $60 million convertible preferred stock investment (convertible at $16.50 per share) by Chase Capital Partners, which is currently Hanger's largest shareholder, and Paribas Principal Inc. "Having our largest shareholder increase its ownership position in our company to help finance this transaction highlights the attractiveness of the opportunity ahead of us," Mr. Sabel said.
NovaCare, Inc. acquired Orthopedic Services, Inc. in 1992 and built the division into the largest O&P patient-care services company in the industry. The company is well known in the O&P industry for product innovation. At year-end 1998, NovaCare operated 369 patient-care centers in 37 states.
The transaction will be accounted for as a purchase and is subject to customary conditions including Hart-Scott-Rodino clearance. Closing is anticipated in the second quarter of 1999.
BT Alex. Brown Incorporated acted as financial advisor to Hanger Orthopedic Group, Inc. Warburg Dillon Read and Wasserstein, Perella and Company, Inc. acted as financial advisors to NovaCare, Inc.
Certain statements included in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to both companies' SEC filings for factors that could cause actual results to differ materially from each company's expectations.
The securities to be offered by Hanger to finance the transaction have not been and will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or applicable exemptions from registration requirements.
SOURCE Hanger Orthopedic Group, Inc.
/CONTACT: Ivan R. Sabel, Chief Executive Officer, 301-986-0701, or
Richard A. Stein, Chief Financial Officer, 301-986-0701, or Sam Ostrow, media,
203-328-3018, all of Hanger Orthopedic Group, Inc.; or Timothy E. Foster,
Chief Executive Officer, 610-992-7200, or Ronald G. Hiscock, President -- O&P
Division, 610-992-7200, or Susan J. Campbell, VP, Investor Relations,
610-992-7425, all of NovaCare, Inc./
(HGR NOV)
--------------------------------------------------------------------------------
HGR NOV %MTC %TNM V%PRN P%PRN |
