Shares of BioTelemetry jumped 16.9% on Friday after the company agreed to be acquired by Dutch company Royal Philips in a cash deal worth $2.8 billion. The tech-based healthcare company expects the transaction to close in the first quarter of 2021.
BioTelemetry (BEAT) announced that Philips would buy all its issued and outstanding shares for $72 per share. The deal reflects a 16.5% premium to the stock’s closing price of $61.78 as of Dec. 17. Following the completion of the transaction, about 1,900 employees of BioTelemetry will become part of Philips.
“The acquisition of BioTelemetry fits perfectly with our strategy to be a leading provider of patient care management solutions for the hospital and the home,” said Philips CEO Frans van Houten. “BioTelemetry’s leadership in the large and fast growing ambulatory cardiac diagnostics and monitoring market complements our leading position in the hospital.” (See BEAT stock analysis on TipRanks)
Philips expects the transaction to be accretive to its sales growth and adjusted EBITA (earnings before interest, taxes and amortization). The company anticipates BioTelemetry’s business to grow in the double-digit range, while adjusted EBITA margin is projected to improve to over 20% by 2025.
Following the announcement, Needham analyst Michael Matson downgraded BioTelemetry stock to Hold from Buy. In a note to investors, Matson wrote, “While BEAT shares are trading above the takeover price pre-market, higher strategic bids are unlikely, in our view.” The analyst further noted, “While we believe BEAT has a favorable 2021 set up with multiple opportunities to potentially drive upside to consensus numbers, we are downgrading BEAT to a Hold from a Buy given the pending acquisition.”
Overall, the Street has a cautiously optimistic outlook on the stock with a Moderate Buy analyst consensus. Following this year’s stock rally of 56%, the average price target stands at $62.67 and now implies downside potential of about 13.2% to current levels.
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