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Thermage and Reliant Announce Merger Agreement
Posted: July 7, 2008
Thermage, Inc., a leader in noninvasive tissue tightening, and Reliant Technologies Inc., a privately held leader in skin resurfacing and rejuvenation through its Fraxel line of products, announced that they have entered into a definitive merger agreement under which Thermage will acquire Reliant in a stock and cash transaction valued at approximately $95 million, based upon the closing price of Thermage common stock on July 3, 2008.
The proposed transaction would combine market leaders in skin tightening and skin resurfacing, two of the fastest growing segments of the industry. Thermage and Reliant generated nearly $137 million in revenue on a combined basis for the 12 months ended March 31, 2008. The transaction is expected to create cross-selling opportunities in the domestic and international markets. The combined company will have a broad global footprint, address a wider range of skin conditions and continue to maintain a high consumable component in the revenue mix.
Annualized cost savings resulting from the combination are expected to be approximately $14 million and the transaction is expected to be accretive to current consensus analysts' estimates for 2009 of $0.26 per diluted share. In addition, Thermage reported that second quarter revenue is expected to be between $17.7 and $17.9 million.
The boards of directors for both companies have approved the proposed transaction, which is subject to customary closing conditions, including approval by the stockholders of Thermage. The stockholders of Reliant have already approved the transaction by written consent. Certain Thermage stockholders holding more than 33% of the outstanding shares of Thermage have agreed to vote in favor of the transaction. The proposed transaction is currently expected to close during the fourth quarter of 2008.
"This proposed transaction combines two of the most dynamic companies in our industry and creates a strong growth vehicle for our shareholders, customers and employees," said Stephen J. Fanning, chairman of the board, president and CEO of Thermage. "Thermage and Reliant Technologies each have highly recognized and valued brand names in our industry. By combining our companies, we will be extremely well positioned to develop significant cross-selling opportunities as well as benefit from two business models that have significant consumable revenue. As a result, we expect the combination of the two companies to be accretive to our existing shareholders."