Press release

DSM agrees to acquire Kensey Nash to strengthen its biomedical business

Heerlen, NL, 03 May 2012 08:15 CEST

  • DSM (NYSE Euronext: DSM KON) to offer $38.50 for each share of Kensey Nash (NASDAQ: KNSY) in an all-cash transaction through a tender offer
  • Total enterprise value of approximately $360 million (about €275 million)
  • Kensey Nash existing guidance for its fiscal year ending June 2013: Net sales $100 million; EBITDA $36 million.
  • Offer price represents 33% premium to Kensey Nash’s closing share price on May 2, 2012
  • Kensey Nash Board of Directors unanimously recommends the offer
  • Kensey Nash is a leader in regenerative medicine and biomaterials R&D, with world class manufacturing and strong strategic partnerships
  • Strong strategic fit; acquisition will strengthen and complement DSM Biomedical’s business and capabilities
  • Acquisition will put DSM Biomedical on the map as a new profitable growth platform for DSM
  • Acquisition EPS accretive from 2013 onwards

Royal DSM, the global Life Sciences and Materials Sciences company, announced today that it has entered into a definitive agreement with Kensey Nash under which DSM would acquire all the outstanding shares of common stock of Kensey Nash through a cash tender offer, followed by a merger with a subsidiary of DSM, for $38.50 in cash per share for total enterprise value of approximately $360 million. The transaction has been unanimously approved by both DSM’s Supervisory Board and Kensey Nash’s Board of Directors. The agreed price represents a premium of 33% to Kensey Nash’s closing share price of $29.01 on May 2, 2012. Subject to customary conditions, the transaction is expected to close around the end of Q2 2012.

Kensey Nash is a US based, technology-driven biomedical company, primarily focused on regenerative medicine utilizing its proprietary collagen and synthetic polymer technology. It manufactures and sells medical device parts in cardiology, orthopedic, sports medicine, spinal and general surgery. The company is headquartered in Exton (Pennsylvania, USA) with approximately 325 employees. For Kensey Nash' s fiscal year ending June 30, 2012, Kensey Nash has previously issued guidance for net sales of almost $90 million, growing to about $100 million in its fiscal year ending June 2013, with EBITDA margins above 30%.

Over 25 years ago Kensey Nash developed what is now the leading arterial closure device in the world using resorbable collagen, synthetic polymer technologies and device engineering expertise. The company has developed a large catalogue of technologies that are used to create high-quality products and devices. Its mechanical device, collagen processing, synthetic polymer, bone mineral, extracellular matrix and other products provide a solid foundation to develop an expansive variety of innovations in regenerative medicine.

Strategic rationale

The purchase by DSM of Kensey Nash will strengthen and complement DSM Biomedical’s business and capabilities, while clearly meeting DSM’s financial and strategic criteria. DSM Biomedical is one of three Emerging Business Areas of DSM. DSM has an aspiration to realize €1 billion in sales by 2020 in its combined Emerging Business Areas and this acquisition puts DSM Biomedical well on track to meet its contribution to this aspiration. With the acquisition of Kensey Nash, DSM Biomedical will be well-established as a profitable growth platform. Earlier this year DSM established a joint venture for cellulosic bio-ethanol with POET in its other growth platform, DSM Bio-based Products & Services.

For DSM Biomedical the acquisition of Kensey Nash is an important step in realizing its strategic ambition to build strong positions in bio-passive, bio-active and bio-interactive materials. The acquisition will strengthen DSM Biomedical’s existing position in the market for bio-passive (medical coatings and polymers) and the emerging market for bio-active (resorbable polymers and drug delivery) materials. It will also provide DSM with a strong position and pipeline of new technologies in the developing field of regenerative medicine and tissue engineering (bio-interactive materials).

Kensey Nash has strong relationships with an attractive US customer base, which will provide the opportunity to leverage DSM Biomedical’s current portfolio. In addition, DSM’s customer base in Europe and Asia will offer attractive growth opportunities for Kensey Nash’s product portfolio.

Feike Sijbesma, CEO and Chairman of the DSM Managing Board, said: “As life expectancy continues to increase and people want to remain physically active, growth in the biomedical materials market is expected to remain high. Biomedical is one of the key areas where DSM is able to fully leverage its unique science-based expertise in Life Sciences and Materials Sciences. With this acquisition, we are putting DSM Biomedical clearly on the map as the second new growth platform for DSM in addition to our Bio-based Products & Services business as we continue to create value for all stakeholders by providing innovative, sustainable solutions to the world’s greatest challenges.”

Rob van Leen, Chief Innovation Officer of DSM, commented: “With the acquisition of Kensey Nash we will significantly strengthen and broaden DSM Biomedical, while our geographic reach will open up new markets for Kensey Nash’s products. I look forward to welcoming Kensey Nash’s highly skilled team to DSM as we continue to build our presence in biomedical materials.”

Joe Kaufmann, President and CEO of Kensey Nash, said: “This transaction will not only deliver significant value to our stockholders, but it will also be a great event for our strategic partners, customers and employees. The combination of DSM’s unique expertise in Materials Sciences and our regenerative medicine products and capabilities will allow DSM and Kensey Nash to innovate together and further grow and expand the business.”

Walter Maupay Jr., Chairman of the Board of Kensey Nash, said: “The Board of Directors unanimously concluded that this transaction is in the best interests of Kensey Nash and its stockholders. We believe this is a very positive outcome for our stockholders and maximizes the value of Kensey Nash’s regenerative medicine platforms.”

The transaction

Under the terms of the merger agreement, the acquisition is structured as an all-cash tender offer for all the outstanding shares of Kensey Nash common stock to be followed by a merger as soon as possible. The Kensey Nash Board of Directors has unanimously recommended that Kensey Nash stockholders accept the offer and tender their shares into the offer when it is made. The tender offer is expected to commence in May and subject to the satisfaction of customary conditions, including the tender of a majority of the outstanding shares of Kensey Nash common stock on a fully-diluted basis and customary approvals. The transaction is expected to close around the end of Q2 2012.

The transaction is not subject to a financing condition, and DSM intends to finance the acquisition from existing cash.

DSM expects the transaction to be accretive to earnings from 2013 onwards.

Additional information

Citigroup is serving as financial advisor to DSM, and Cleary Gottlieb Steen & Hamilton LLP is serving as legal counsel to DSM. Jefferies & Company, Inc. is serving as financial advisor to Kensey Nash and Katten Muchin Rosenman LLP is serving as legal counsel to Kensey Nash.

Kensey Nash

Kensey Nash is a medical device company primarily focused on regenerative medicine utilizing its proprietary collagen and synthetic polymer technology. The company is recognized as a leader for innovative product development and unique technology in the field of resorbable biomaterials. The company has an extensive range of products, which are sold through strategic partners in multiple medical markets, including the cardiology, orthopedic, sports medicine, spine, trauma, craniomaxillofacial and general surgery markets.

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