Integra LifeSciences (IART) announced that it has made a binding offer to acquire the Johnson & Johnson (JNJ) Codman Neurosurgery business for a price of $1.045B in cash.

Codman Neurosurgery offers a portfolio of devices focused on advanced hydrocephalus, neuro-critical care and operative neurosurgery. Codman Neurosurgery is a part of Depuy Synthes Companies of Johnson & Johnson. Codman Neurosurgery's existing portfolio and new product pipeline in advanced hydrocephalus, neuro-critical care and electrosurgery complement Integra's leading products and pipeline in tissue ablation, dural repair and cranial stabilization. Together, this comprehensive portfolio will offer customers around the world complete solutions for neurosurgery and the scale to invest and bring new technologies to patients worldwide. The acquired products generated approximately $370M in revenue during 2016 with an EBITDA margin of about 31%. Integra expects the transaction to be accretive to adjusted EPS by at least 22c in the first full year after closing and increasing thereafter, and to GAAP EPS by the end of the third year. This acquisition is expected to also accelerate the path to achieving Integra's aspirational targets of $2 billion in revenue and 30% adjusted EBITDA margin. Integra expects the Codman Neurosurgery revenue to experience some initial disruption in the first year of the combination, and to then grow 3% to 6% longer term. Integra expects to provide detailed guidance regarding the financial impacts of this transaction upon closing. Integra has obtained committed financing, subject to customary closing conditions, from BofA Merrill Lynch and JPMorgan in connection with the planned acquisition.

The company plans to finance the acquisition at the closing through a combination of cash on hand, availability under its revolving credit facility and a new senior secured term loan facility. Following consummation of the transaction, Integra will focus on near-term cash flow generation to reduce portions of outstanding debt.