Owens & Minor to Acquire Apria, Inc. for $1.6B; Shares Drop 7%

Owens & Minor, Inc. (NYSE: OMI) has inked a deal to acquire Apria, Inc. (NASDAQ: APR) in an all-cash deal worth $1.60 billion.

Following the news, shares of Owens & Minor, Inc. dropped almost 7% during the pre-market trading session on January 7, at the time of writing. Meanwhile, Apria shares jumped 25%, close to the deal price of $37 per share.

Founded in 1882, Owens & Minor is a global healthcare logistics company with distribution, production, and innovative technology services located across the Asia Pacific region, Europe, Latin America, and North America.

Benefits of the Deal

Based in the U.S., Apria is a leading provider of integrated home healthcare equipment and related services. It provides a wide range of products and services for in-home care and delivery across three core service lines: home respiratory therapy, obstructive sleep apnea treatment, and negative pressure wound therapy.

The addition of Apria will bolster the total company value proposition, complement Owens & Minor’s Patient Direct offering, accelerate growth and diversify its revenue base while providing the highest quality healthcare solutions to customers.

Furthermore, it will create a leading platform for future growth within the highly-fragmented and growing space representing a total addressable market (TAM) of $50 billion.

Notably, the company expects accretion across key financial metrics and free cash flow from year one.

Other Details

According to the terms of the deal, Owens & Minor will pay $37.50 in cash per share of Apria, which implies an equity value of approximately $1.45 billion. The total transaction value stands at $1.6 billion, including the assumption of debt.

The deal price implies a 26% premium over Apria’s closing share price on January 7, 2022, and a 24% premium compared to the 30-day volume-weighted average price.

The acquisition is expected to close during the first half of 2022, subject to certain regulatory approvals.

CEO Comments

Sharing his excitement about the deal, Owens & Minor CEO, Edward A. Pesicka, commented, “The combination of two complementary businesses in Byram Healthcare and Apria will enable us to better serve the entire patient journey – through the hospital and into the home – ultimately furthering our mission of Empowering Our Customers to Advance Healthcare”.

He further added, “In addition, this transaction diversifies our total company revenue stream by expanding our presence in the higher-growth home healthcare market.”

Wall Street’s Take

On January 5, BofA Securities analyst Michael increased the price target on Owens & Minor to $55.00 (22% upside potential) from $53 and reiterated a Buy rating on the stock.

Overall, the stock has a Strong Buy consensus rating based on 3 unanimous Buys. The average Owens & Minor stock forecast of $56.67 implies 25.7% upside potential from current levels.

TipRanks’ Smart Score

OMI scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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