A Medical Device Daily

HAPC (New York) reported that it has entered into an agreement to acquire InfuSystem (Madison Heights, Michigan), a subsidiary of I-Flow (Lake Forest, California), for $140 million.

HAPC will acquire all the outstanding shares of InfuSystem from I-Flow through a newly formed subsidiary of HAPC for $140 million, subject to adjustment relating to the level of working capital. I-Flow will receive the total consideration in cash or a combination of cash and a promissory note, depending on financing arrangements to be determined.

InfuSystem is a nationwide provider of ambulatory infusion pump management services for the oncology market. It works with oncology practices to provide continuous infusion pumps and related billing, collection and administrative services primarily to colorectal cancer patients.

The use of continuous infusion chemotherapy regimens has grown significantly during the past three years, driven by superior therapeutic outcomes, greater patient satisfaction and lower costs than traditional bolus chemotherapy, HAPC said.

Donald Earhart, chairman/president and CEO of I-Flow, said, “InfuSystem has been an outstanding performer since I-Flow acquired the business in 1998. As we move forward, however, our strategic focus for future growth is on I-Flow pain relief products and our goal of being the leader in treating acute pain after surgery.”

In accordance with HAPC’s certificate of incorporation, the acquisition must be approved by the holders of a majority of the shares of HAPC stock sold in HAPC’s initial public offering. In addition, the acquisition cannot be completed if the holders of 20% or more of the shares of HAPC common stock sold in the IPO vote against the acquisition and demand that their shares be converted into the right to receive a pro rata portion of the net proceeds of the IPO held in the trust account established for this purpose at the time of the IPO.

The transaction is expected to close by the end of 2006 or 1Q07, subject to customary conditions and stockholder approval.

HAPC is a “blank check” company recently formed to acquire, through a merger, capital stock exchange, asset acquisition or other similar combination, healthcare businesses.

Owens & Minor (O&M; Richmond, Virginia) reported that on Sept. 30 it completed the previously reported $165 million acquisition of certain assets of the acute-care medical and surgical supply distribution business of McKesson Medical-Surgical , a business unit of McKesson (San Francisco).

The transaction was closed following federal regulatory review and satisfaction of customary conditions.

On July 11, the companies reported signing a definitive purchase agreement. O&M acquired the business for about $165 million, including net inventory valued at about $122 million.

O&M said it expects the acquisition, funded by available cash and financing under the company’s existing bank revolver, to generate at least $800 million in incremental annual revenue.

With transaction close, the companies launched a transition plan designed to convert the McKesson business to O&M over a six-month period. Under fee-for-service transition-services agreement, O&M will compensate McKesson for providing distribution and support services to customers until the customers are converted.

The company said it anticipates that the dilutive impact to earnings from the transaction over the transition period will be $10 million-$15 million, before taxes, a portion of which will be included in O&M’s 3Q06 financial report as a result of preparation for the transition.

O&M distributes national name-brand medical and surgical supplies and is a healthcare supply chain company serving hospitals, integrated healthcare systems, alternate care locations, group purchasing organizations, the federal government and consumers.

In other dealmaking:

• ATS Medical (Minneapolis) reported that it finally has completed its $58 million acquisition of 3F Therapeutics (Lake Forest, California), a privately-held company developing tissue heart valve products. The deal was first disclosed in January (Medical Device Daily, Jan. 25, 2006).

Michael Dale, president/CEO and chairman of ATS, said, “We believe we are now well positioned to enter the tissue heart valve market with products that are differentiated from those that are currently available and that will offer outstanding benefits to surgeons and their patients.”

ATS manufactures products focused on cardiac surgery. It reports more than 100,000 ATS Open Pivot Heart Valves implanted worldwide. Other product and service offerings include Simulus annuloplasty products for heart valve repair, Surgi-Frost and Frost-Byte products for surgical cryoablation, RTI Cardiovascular for allograft tissue services, home monitoring services for anticoagulation therapy, and the development of Parsus blood filtration technology.

• Tenet Healthcare (Dallas) reported that company subsidiaries completed the sale of four hospitals to two separate buyers. Both transactions were completed on Oct. 1 and are for hospitals that the company previously disclosed would be divested.

The subsidiary has completed the sale of its 51% partnership interest in the Cleveland Clinic Hospital (Weston, Florida), a 150-bed acute care hospital, to the Cleveland Clinic (Cleveland). Pre-tax proceeds including the repayment of partnership loans from Tenet are estimated to be $90 million.

The Cleveland Clinic has committed to offer employment to substantially all current employees, it said.

Tenet and the Cleveland Clinic said they have had a successful partnership since opening the hospital more than five years ago. Tenet announced earlier this year that the Cleveland Clinic would exercise its option to purchase Tenet’s majority interest in the partnership in accordance with their partnership agreement.

The other transaction involved the completion of the sale of three Tenet hospitals in the New Orleans area to Ochsner Health System (New Orleans) for about $48.5 million. The hospitals are the 203-bed Kenner Regional Medical Center (Kenner), 207-bed Meadowcrest Hospital (Gretna) and the 317-bed Memorial Medical Center (New Orleans).