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By Tim McLaughlin
NEW YORK, July 22 (Reuters) - Medical device maker Ev3 Inc. EVVV.O said on Sunday it would buy FoxHollow Technologies Inc. FOXH.O for about $780 million in cash and stock to expand its array of products that combat vascular disease.
The combination is expected to generate net sales of up to $615 million in 2008. Ev3's cash-and-stock offer of $25.92 for each share of FoxHollow represents a premium of more than 20 percent, based on 30-day average trading price for FoxHollow shares.
On Friday, FoxHollow shares surged 9.3 percent to close at $24.72 on Nasdaq. The transaction is expected to be completed in the fourth quarter of 2007.
Under the terms of the deal, FoxHollow shareholders will get 1.45 shares of Ev3 stock plus $2.75 in cash for each share of FoxHollow they own. Ev3 shareholders would end up owning about 59 percent of the combined company.
The deal is expected to produce more than $40 million a year in cost savings, the companies said in a statement.
The earnings-per-share forecast for 2008 is 60 to 70 cents, excluding merger-related costs. For 2009, Ev3 expects revenue between $700 million and $750 million and earnings per share of 90 cents to $1.10.
Ev3 Chief Executive Jim Corbett will be CEO and chairman of the combined company and FoxHollow's top executive, John Simpson, will become vice chairman and chief scientist.
The company will be based in Plymouth, Minnesota. Banc of America Securities is acting as sole financial adviser to Ev3. JPMorgan Chase & Co. and Thomas Weisel Partners LLC are the financial advisers to FoxHollow.