Shareholders of Advanced Medical Solutions Group, known by the abbreviation AMS, approved the sale of the company to H.B. Fuller for £715 million, removing a major obstacle to completion of the deal. H.B. Fuller said it expects to close the acquisition before the end of the year.
AMS is a British manufacturer of tissue-healing technologies, and the acquisition gives H.B. Fuller broader access to markets for surgical biomaterials designed for medical applications and mechanical closures, while also expanding its existing portfolio of medical adhesives, tapes and surgical dressings.
Expanding H.B. Fuller’s medical business
H.B. Fuller manufactures adhesives and insulation materials for sectors including aerospace and packaging, but it has identified the medical market as one of the most attractive markets for its products. The company believes that aging populations and rising rates of chronic diseases could support continued growth in demand for medical adhesives and insulation materials.
In recent years, H.B. Fuller has increased its exposure to the medical sector through the acquisitions of Tissue Seal, Adhezion Biomedical, Medifill and GEM, in addition to organic investment. The company’s chief executive, Celeste Mastin, said in an earnings call in June that the medical market is “highly fragmented and specialized” and includes significant barriers to entry, such as regulatory approvals, clinical validation and stringent customer qualification requirements.
H.B. Fuller announced the AMS deal on the same day that Mastin made these remarks. With AMS shareholders’ approval, the company is moving toward completing a deal that will significantly expand its medical unit.
Deal impact on revenue and products
H.B. Fuller recorded $68 million in sales of medical adhesives during the past year, while AMS generated approximately $302 million in revenue. H.B. Fuller expects medical sales to account for 10% of its total business after the deal is completed, adding a fourth growth driver to a business currently reliant on adhesives in the construction, engineering, hygiene and health, and consumer products markets.
Through AMS, H.B. Fuller will enter the market for designed surgical biomaterials, including antibiotic-coated collagen and bone-building devices. It will also expand its presence in surgical adhesives and mechanical closures, AMS’s two largest units, which together accounted for two-thirds of the company’s sales during the past year.
Synergy and cost-reduction estimates
H.B. Fuller expects the deal to generate approximately $55 million in synergies, comprising $20 million in commercial gains and $35 million in savings. The commercial gains include cross-selling opportunities that the company expects to leverage through access to AMS’s direct European surgical sales team.
H.B. Fuller intends to reduce costs by eliminating overlapping administrative activities between the two companies. The deal comes as the company received a non-binding offer to sell its construction unit this week, according to the source.