Salona Global Medical Device Corp. will acquire injection and blow molder DaMar Plastics Manufacturing Inc. and also said it will buy the rehabilitation and sport medicine device assets of an unnamed company "as quickly as possible."
Salona plans "to retain the DaMar staff and leadership as is," Jethro Rothe-Kushel, vice president of capital markets and financial communications at Salona, told Plastics News in an email.
"We look forward to welcoming the DaMar Plastics team into the Salona Global family. Plastics are an integral part of Salona Global's current business," Salona CEO Luke Faulstick said in an emailed statement. "Through vertical integration, we expect this acquisition will continue to improve our gross margins while further expanding our customer base, revenue streams and bottom line."
The medical device assets have "unaudited annual revenues of $26 million with gross margins in excess of 30 percent," an Aug. 15 news release said. El Cajon, Calif.-based DaMar Plastics, which serves the medical and consumer industries, has $6.38 million in annual sales, it said, with 47 percent gross profits.
The acquisition of DaMar "builds upon the [Salona's] strategy to create a fully integrated global medical device company and would add precision plastics technology capabilities to the company," the release said.
"These deals together, if closed, would increase our revenues by over 60 percent, to over $80 million a year, while maintaining gross margins above 30 percent," Faulstick said in the release.
"We're intent on closing both of these deals as quickly as we can, and we are fortunate to have managed our balance sheet such that we don't have a need for equity financing to close them," Salona Global Chairman Les Cross said in the release. "We continue to work to drive our five engines of revenue and profit growth bringing more momentum to our fast-growing company: acquisitions, internal sales force recruitment, product development, in-licensing product IP and sales distribution agreements."
A letter of intent to acquire the unnamed rehabilitation and sports medicine device maker, announced at the same time as the DaMar deal, did not specify what processes that company may do.
"Between the cash on the balance sheet and debt financing in place from an existing U.S. lender, SGMD has sufficient funds to close both acquisitions without any equity financing," the release said.