Transaction Terms, Closing and Financial Updates
The LivaNova HV business is a comprehensive portfolio of products, including Perceval, a unique sutureless aortic valve, along with tissue and mechanical valves to fit the differing needs of cardiac surgeons and patients worldwide. The HV business employs approximately 900 employees worldwide with major operations in Saluggia, Italy and Vancouver, Canada.
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The divestiture of the HV business (with the exception of the French HV business for which LivaNova has been granted a binding offer by an affiliate of Gyrus and a decision remains to be made) is for an enterprise value of €60 million (US$73 million) and expected to be complete in the first half of 2021, subject to customary purchase price adjustments, €10 million of which will be paid at the end of 2022. On a full-year basis, we expect the sale of the HV business to be dilutive to earnings per share in 2021 on a fully diluted basis by approximately 10-15 cents, and we expect the divestiture to trigger a net non-cash impairment charge in the fourth quarter of 2020, which we currently estimate to be in the range of US$200 million and US$225 million. The transaction is subject to receipt of applicable regulatory approvals and other customary closing conditions, including mandatory consultation with local unions and works councils, where applicable. Upon closing of the transaction, Gyrus will acquire the plants in both Saluggia, Italy and Vancouver, Canada. Gyrus will also acquire the HV assets and inherit or make offers to HV employees in other countries (with respect to France, to the extent that the binding offer submitted by Gyrus would be accepted by LivaNova). The agreement includes customary warranties and limitations on liability, including that the Company has agreed for a period of seven years following closing to provide reimbursement for certain expenses and those that may arise out of hazardous substances relating to former operations at the Saluggia, Italy campus in an amount up to €37.5 million. The HV business will be led by Christian Mazzi and supported by the existing LivaNova HV team. LivaNova has filed a Current Report on Form 8-K with the Securities and Exchange Commission that provides additional information on the agreement and the impact on the divestiture.
Until the closing, LivaNova will operate HV in the normal course of business, with the HV business and Gyrus remaining separate entities.
Advisors
Goldman Sachs is serving as financial advisor to LivaNova and Cleary Gottlieb Steen & Hamilton LLP is serving as legal counsel.
