STOCKHOLM Sweden's SCA (SCAb.ST) said on Monday it was buying German bandage and plaster cast maker BSN medical for 2.74 billion euros (2.30 billion pounds) from private equity firm EQT in a deal expected to boost the Swedish firm's growth.
The deal values BSN at close to 12 times expected 2017 earnings before interest, tax, depreciation and amortisation (EBITDA) of 235 million euros. Rival Convatec (CTEC.L) is valued at about 14 times expected 2017 core earnings.
"BSN medical has leading market positions in several attractive medical product categories and provides a new growth platform with future industry consolidation opportunities," SCA CEO Magnus Groth said in a statement.
SCA shares rose more than 4 percent in early trade.
SCA said the value of the deal was 2.74 billion on a debt- and cash-free basis, based on estimated net debt of 1.34 billion.
BSN, which employs about 6,000 people worldwide, was set up in 2001 as a joint venture between Beiersdorf (BEIG.DE), the maker of Nivea skin cream, and Britain's Smith & Nephew (SN.L) when they decided to combine their wound care, fracture management, physiotherapy and compression therapy businesses.
SCA, which is a hygiene products and forestry group, said it expected annual synergies of at least 30 million euros from the deal with the full savings from three years after closing, which was expected in the second quarter of 2017.
It said synergies would include accelerated growth from cross-selling BSN medical products and SCA incontinence products and cost savings, mainly in supply chain and administration.
SCA said transaction costs would be about 25 million euros, of which 15 million will be taken as a one-off item in the fourth quarter, and the rest in the second quarter of 2017.
It said it expected restructuring costs of around 10 million euros in the first three years following completion.
BSN reported net sales of 861 million euros last year, with an adjusted operating margin of 15.9 percent.
EQT bought BSN medical in 2012 in a 1.8 billion euro deal and has expanded the business through acquisitions as part of a buy-and-build strategy to boost BSN's operations in markets including France, Brazil, South Africa and New Zealand.
According to recent comments by sources, EQT had also considered a stock market listing for BSN, whose brands include Leukoplast.
(Reporting by Helena Soderpalm; additional reporting by Maria Sheahan in Frankfurt; editing by David Clarke)