Dublin, Ireland-based Allergan has made a substantial move into the aesthetic devices market, announcing Monday a new deal to acquire Zeltiq Aesthetics for $2.48 billion.
Allergan will pay $56.50 per share for the non-surgical body contouring company, a 14 percent premium on its closing price of $49.40 on Friday. Zeltiq shares were up nearly 13 percent by mid-afternoon on Monday, bringing its market cap to $2.24 billion.
When Investment Rhymes with Canada
Canada has a proud history of achievement in the areas of science and technology, and the field of biomanufacturing and life sciences is no exception.
Allergan expects the transaction to close in the second half of 2017.
In a news release, the owner of the famous Botox brand said body contouring would become the third pillar of its global aesthetic portfolio.
“With CoolSculpting, our offerings to plastic surgeons, dermatologists and aesthetic practitioners will now extend to three of the largest and fastest-growing segments of their practices, putting Allergan in a unique position to provide expanded customer service, and help meet the needs of patients,” said Brent Saunders, chairman and CEO of Allergan.
The company states that the global market for body contouring has reached $4 billion — though numbers differ. Several market research reports project a compound annual growth rate of around 8 percent.
Zeltiq pitches itself as a leader in this market, with more than 3.5 million treatments performed to date. From its headquarters in Pleasanton, California, it has developed a controlled-cooling technology based on scientific literature that suggests fat cells are more sensitive to cold temperatures than the surrounding skin or tissue.
This lead to the creation of Zeltiq’s FDA-approved CoolSculpting system, which eliminates fat cells through a targeted cooling technology applied outside the skin. By doing so, it can “selectively reduce stubborn fat bulges that may not respond to diet or exercise,” without the need for anesthesia, needles or surgery.
Allergan sees Zeltiq as a sales leader in a space Leerink analysts describe as rapidly growing and underpenetrated. On the other hand, the deal came as a minor blow to a Cynosure.
Bloomberg reported in January that Cynosure, a maker of lasers for medical and cosmetic treatments, was in the market for a buyer. Allergan was named as a possible suitor, but it seems Zeltiq had already caught its eye. Cynosure’s stock price was down 7.5 percent with today’s news, though the Leerink analysts noted today that the aesthetic device field is still ripe for consolidation.
