Surmodics shareholders approve merger with BCE Parent

On Monday, Surmodics Inc., a Minnesota-based medical device company, announced that its shareholders have approved a merger with BCE (NYSE:) Parent, LLC, a Delaware limited liability company, and its wholly owned subsidiary BCE Merger Sub, Inc. This decision came during a special meeting where approximately 78% of the outstanding shares were represented.

The approval of the merger agreement, which is one of the conditions for completing the transaction, was supported by a majority vote with 10,448,258 for and 721,828 against, with 1,869 abstentions. However, the merger’s finalization is still subject to additional conditions, such as the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

In a non-binding advisory vote, the shareholders also endorsed the compensation that may be paid to Surmodics’ named executive officers in connection with the merger. The vote for this proposal was 9,081,752 in favor, 1,980,220 against, and 109,983 abstentions.

Additionally, the proposal to approve adjournments of the special meeting, if necessary to solicit more proxies, passed with 10,320,260 votes for, 778,873 against, and 72,822 abstentions. However, since the shareholders approved the merger agreement, adjournment was not required.

The company noted that the merger and related transactions could involve unexpected costs, liabilities, or delays and that the announcement or pendency of the merger could affect the company’s business, including its stock price, operations, employee retention, and business relationships.

The information provided is based on the latest 8-K filing by Surmodics with the Securities and Exchange Commission.

In other recent news, Surmodics Inc. has been the subject of notable developments. The company is currently under Federal Trade Commission (FTC) scrutiny regarding its planned merger with BCE Parent, LLC. The regulatory review process, known as a “Second Request,” has extended the waiting period for the merger, but both companies aim to finalize the transaction before February 28, 2025.

Simultaneously, Surmodics has agreed to be acquired by private equity firm GTCR in a deal valued at approximately $630 million. The transaction, approved by Surmodics’ Board of Directors, is expected to conclude in the second half of 2024, resulting in Surmodics transitioning to a privately held entity.

In response to the acquisition news, Surmodics was downgraded from Buy to Hold by a Needham analyst. The analyst suggested that a private equity firm, rather than a strategic buyer, is better suited for acquiring Surmodics, given that a significant portion of its sales comes from coatings sold to other medical device companies.

These are the latest developments for Surmodics, as the company navigates through significant transitions.

InvestingPro Insights

As Surmodics Inc. navigates through its merger and acquisition processes, the financial landscape of the company reveals some noteworthy points. According to InvestingPro, the company’s stock is currently trading near its 52-week high, with the price at approximately 94% of this peak. This could indicate investor confidence in the ongoing transactions and the future prospects post-merger.

Despite recent downgrades by analysts, Surmodics has shown a strong return over the last three months, with a 21.27% price total return, reflecting a resilient performance in the market. This is coupled with a notable gross profit margin in the last twelve months as of Q3 2024, standing at 80.84%, suggesting the company’s ability to maintain profitability in its operations despite broader challenges.

One of the InvestingPro Tips highlights that Surmodics operates with a moderate level of debt, which could be a strategic advantage in the company’s transition to a privately held entity post-acquisition. On the other hand, analysts do not anticipate the company will be profitable this year, and net income is expected to drop, which are critical considerations for investors monitoring the company’s financial health.

For those seeking deeper insights, there are an additional nine InvestingPro Tips available, providing a comprehensive analysis of Surmodics’ financial position and market performance. These tips offer valuable guidance for investors considering the implications of the company’s strategic moves and their potential impact on shareholder value.

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