Poly Medicure Limited announces acquisition of Citieffe Group

Poly Medicure Ltd. (NSE: POLYMED | BSE: 531768), Poly Medicure Ltd is India's leading Medical Device company with a dominant position in medical consumables market, today announced signing of definitive agreement to acquire 100% stake in Medistream SA ("Group") consisting of Citieffe SRL and its step-down subsidiaries in USA & Mexico, at an Enterprise Value of INR 324 Crores (EUR 31 Million). Citieffe is an Italy based manufacturer specializing in the orthopaedic trauma and extremities segment with a direct presence in Italy, USA, and Mexico, and distribution across 25+ countries. The company generated revenues of EUR 17.3 million and EBITDA of EUR 3.1 million in CY 2024, reflecting year-on-year growth of 15% and 14% respectively. This strategic acquisition provides Poly Medicure with an entry point into the large global orthopaedics market, particularly in the trauma and extremities segment, which is the fastest growing and most resilient category within orthopaedics.

Strategic Rationale for Acquisition:

- Large global TAM: Provides platform for expanding into attractive orthopaedics segment specifically focused in the fastest-growing extremities sub-segment; platform to build a global orthopedic business

Differentiated portfolio: A diverse, fully accredited and patented portfolio of trauma & extremity products. It has 45 patents and full EU MDR clearance and accreditation in key markets like USA (FDA)

- Global Presence: Direct sales presence in Italy, USA and Mexico. #2 independent player in Italy with a c.12% + market share in its targeted segment, one of the top players in Mexico with 12% + market share and growing presence in US, the largest orthopaedic market

- Integrated Business Solution: Citieffe has inhouse capabilities from product R&D to manufacture to sales and distribution. Agile product development leading to quick to market innovations

- Growth Potential: A resilient and profitable business in a growing orthopaedic segment (Trauma & Extremities) with ability to enter orthopaedics adjacencies through strong in-house R&D. Also offers significant potential to scale-up US business wherein product pricing also is higher as compared to other geographies

- Strong Financials: Citieffe's EUR 17.3M revenue and EUR 3.1M EBITDA (CY '24) with 15%/14% y-o-y growth provides a proven, scalable platform

- Synergies: Boost financial performance by leveraging Polymed's manufacturing expertise and global distribution network.

- Product portfolio expansion through addition of Plates in near term. Also, plan to enter joints replacement market in medium term

- US expansion by hiring more sales reps in US to bolster coverage in largest ortho market wherein prices are also premium to Europe

- Outsourcing parts of manufacturing process to India could help in reducing cost of product thus boosting margins

- Introduce Citeffe in India; manufacture locally-lower costs, stronger competition, differentiated portfolio

- Expansion of distribution network through leveraging existing Polymed global distribution network can not only help deepen presence in Europe but expand to other countries globally

Transaction Structure Overview:

- Acquiring Medistream SA ("Group") consisting of Citieffe SRL and its step-down subsidiaries in USA & Mexico

- Existing Management to continue post transaction; Mr. Pascal Govi to continue as CEO

- Acquiring 100% of the company (majority stake with Archimed; a Europe based healthcare focused PE fund)

- Equity Valuation of ~Euro 18.8mn; shareholder loan liabilities of Euro 4.2mn to be repaid; total upfront payout of ~Euro 23mn; taking over net external debt of Euro 8.1mn

- With Enterprise Value of EUR 31 million, the transaction values company at EV/EBITDAx of 10.2x (FY 24 basis)

- The acquisition is subject to customary closing conditions and approvals and is expected to be closed in next 4-8 weeks

Commenting on the acquisition, Mr. Himanshu Baid, Managing Director, Poly Medicure Limited stated: "This acquisition marks another step in our journey to become a comprehensive healthcare solutions provider. Citieffe's strong R&D capabilities and diverse trauma & extremity portfolio aligns with our mission to deliver innovative, patient-centric technologies. Together, we will be able to accelerate the expansion into orthopaedics adjacencies and expand reach to more patients globally. Citieffe has direct sales operations in the U.S., Italy, and Mexico providing us a deeper foothold in these key markets. We see synergies in combining Citieffe's innovation pipeline with Polymed's manufacturing scale and commercial reach-this is about creating long-term value for healthcare providers, patients, and our stakeholders"

Commenting on the acquisition, Mr. Pascal Govi, CEO, Citieffe stated "It has been a pleasure to work with ARCHIMED, who always acted as a responsible shareholder, notably during Covid times. Their commitment to invest in a stronger organization, international development and innovation was key to reinforce the strategic positioning of Citieffe. The company was well prepared for attracting a leading Medtech company such as Polymed. I'm enthusiastic to start a new venture with a group sharing a common culture and vision."

Commenting on the acquisition, Mr. Benoit Varichon, Partner at ARCHIMED stated "We would like to thank CEO Govi and his team for their trust and outstanding achievement. Over the years, Citieffe has built solid and long-term growth foundations with an innovative and MDR-accredited product portfolio as well as a strong international footprint notably in the US. We are proud to see Citieffe joining a leading Medtech Group to pursue its growth trajectory."

Shares of Poly Medicure Limited was last trading in BSE at Rs. 1950.00 as compared to the previous close of Rs. 1956.50. The total number of shares traded during the day was 7193 in over 1041 trades.

The stock hit an intraday high of Rs. 1965.45 and intraday low of 1933.00. The net turnover during the day was Rs. 14020107.00.

Source : Equity Bulls

Keywords

PolyMedicure INE205C01021 MedicalEquipment Acquisition MedistreamSA CitieffeSRL