ConMed in final stages of Viking acquisition

UTICA — ConMed Corporation’s acquisition of Massachusetts–based Viking Systems, Inc. is all but a done-deal now that the Utica medical-device manufacturer owns a majority of Viking stock through a successful tender offer.

ConMed’s wholly owned subsidiary, Arrow Merger Corp., successfully acquired 64.4 million shares, representing approximately 83.59 percent of Viking’s outstanding shares, for 27 cents per share in a tender offer that concluded at midnight on Sept. 21. Arrow will now move forward to purchase the rest of the shares, a move it can take as majority owner without requiring approval from other shareholders.

Once that is completed over the next several weeks, Viking becomes a wholly owned subsidiary of ConMed (NASDAQ: CNMD).

Viking, located between Worcester and Boston, develops and manufactures 3D and 2D visualization systems for minimally invasive surgery, and it’s that technology that made the acquisition an attractive one for ConMed, says ConMed CFO Robert Shallish.

“We’re excited about it because of the technology,” Shallish says. “We have a great 2D system, but 2D is different than 3D.”

For Viking, the deal is attractive because it brings a much-needed influx of cash to the company. The small, 30-employee company has struggled in recent years, reporting a net loss for the five most recent quarters, including a loss of $890,000 in the second quarter of this year.

ConMed, on the other hand, reported net income of $10.3 million in the second quarter, up 19 percent from $8.7 million in the year-earlier period. 

Shallish says he expects the Viking acquisition to be initially neutral to ConMed’s bottom line, but to add to earnings in fairly short order. He declined to provide specific revenue or profit projections.

When the merger was announced, Viking CFO Robert Matthews told The Business Journal that the company was running short on cash and had been seeking either capital investments or strategic partnerships since early 2012.

The pairing with ConMed makes sense, he said, because ConMed has the market access and selling power Viking lacks to make its product a success. “ConMed does have demonstrated access to the market,” he said. “We just don’t have the clout and the name recognition.”

Viking’s key product is its 3D-HD Vision System, a three-dimensional vision system that uses a flat-screen monitor and passive glasses. Surgeons use the system during minimally invasive laparoscopic urology, gynecologic, bariatric, cardiac, neurologic, and general surgery. The product is designed to fill the gap between conventional two-dimensional systems and three-dimensional systems available as part of robotic systems.

The product provides improved speed and accuracy during surgery at a fraction of the cost of a robotic system, Matthews told The Business Journal in August.

ConMed plans to relocate its current two-dimensional surgical video research and marketing team from Santa Barbara, Calif. to the Viking group in Massachusetts over the next year. Shallish said the companies will work over the next several weeks to transition the team and get the sales force cross-trained on all ConMed and Viking offerings.

The current plan is to keep all 30 Viking employees, who become part of ConMed’s visualization division located at Viking’s facility in Westborough, Mass.

Headquartered at 525 French Road, Utica, ConMed (www.conmed.com) manufactures surgical devices and equipment for minimally invasive procedures and patient monitoring. The company employs about 3,400 people worldwide.               

Contact DeLore at tdelore@tmvbj.com