Introduction
The nature of the Covid-19 pandemic, from a purely medical standpoint, has fueled interest for companies directly related to the process of dealing with the outbreak. A clear example of this the acquisition of TNI Medical by Masimo.
Companies Overview
Masimo is a global medical technology company. Its market capitalization on the NASDAQ is over $11bn. TNI Medical is a German healthcare company, specialized in advanced ventilation. It recently developed a new technology, softFlow, which delivers high flow, warmed and humidified respiratory gases to patients suffering from serious pulmonary conditions. Due to the Covid-19 pandemic, the demand for the softFlow technology has dramatically increased. Both companies operate in the industry of medical equipment and devices. Even though companies evolving in this industry have to deal with an ever-evolving industry, especially in 2020, the rapid pace of transformation, change, and growth occurring in this industry reflects the current trends in the larger healthcare sector.
Deal Structure
The acquisition of TNI Medical is actually Masimo exercising its exclusive option to acquire fully, after a first minority investment in TNI Medical in August 2019. The transaction was announced on the 20th of March and is expected to be closed during the second quarter of 2020. The finance structure of the acquisition is cash only. The amount of the acquisition is undisclosed because the acquisition will have an immaterial impact on Masimo’s net earnings of 2020, due to the relative difference in size between the two companies (Masimo being considerably larger). Masimo has decided to exercise the option to fully capture TNI Medical’s cash flow generated during a period of large inflows, and to scale manufacturing. After the announcement of the acquisition, the stock price of Masimo on the NASDAQ increased dramatically, showing that the market sentiment is favorable to this acquisition. On the graph below, we can see that the stock price started increasing on Monday the 23rd of March because the announcement was made on a Friday (20th of March) after closing hours.
Sources: Companies Website, Businesswire, Seekingalpha, Marketwatch, SPglobal, Bloomberg
To contact the author:
Edouard Barret – edouard.barret@studbocconi.it
Bocconi Students M&A Circle 
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