Intelligent Ultrasound shares surge as it agrees £45m cash acquisition by Surgical Science
() , an ultrasound AI software and simulation company, said it has reached a deal for the cash acquisition of its entire share capital by Surgical Science Sweden AB.
Under the terms of the acquisition, will receive 13p for each share held. The price values at c. £45.2m on a fully diluted basis. This represents a c. 17% premium to 's closing price on December 18, 2024, as well as a 31% premium to the volume-weighted average price for the past 12 months.
Intelligent Ultrasound's management was advised by broker Cavendish on the terms of the acquisition, saying they considered them to be "fair and reasonable" in a statement issued by the company today. Accordingly, 's board said it would recommend unanimously that shareholders vote in favour of the deal.
The full cash consideration, together with fees and expenses, will be funded through cash on Surgical Science's balance sheet, including £17m drawn down pursuant to a short-term bridging loan.
Tom Englund, CEO of Surgical Science, commenting:
"We have followed Intelligent Ultrasound for many years and are impressed with the position that the team has managed to build in the ultrasound simulation market. The ultrasound market is developing rapidly with a strong increase in the number of systems sold, highlighting the need for simulation training that will enable practitioners to utilise the systems to their full potential. Through the acquisition of Intelligent Ultrasound, we further diversify our product portfolio and expand our geographical reach and sales network, enabling us to provide a comprehensive suite of ultrasound simulation products across the world, benefitting customers and reinforcing our market leadership. We look forward to the Intelligent Ultrasound team joining us and to start working together towards our high ambitions in the growing medical simulation market."
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Intelligent Ultrasound announces its full acquisition by Surgical Science for c. £45m in cash, representing a 17% premium to yesterday's closing price. Consequently, shares jumped by c. 15% on the announcement.
The news is not entirely unexpected as spun off its Clinical AI business to GE HealthCare earlier in 2024 for £40.5m in cash, leaving only its Simulation business (including the NeedleTrainer and NeedleTrainer Plus products). Similarly, that deal represented a 71% premium to the prior day's closing price, triggering a c. 50% jump in share price, which has since maintained.
Both cash considerations indicate the high inherent value of 's technology compared to the company's valuation, as both GE and Surgical Science have recognised the growing importance of medical imaging technology, specifically in training where is a pioneer.
The merging of 's remaining business with Surgical Science was strategically timed to benefit both companies' long-term goals. With a solid customer base in medical schools and hospitals, 's business is well-positioned to capitalise on growing demand for training in the sector. However, the business remains niche and could not sustain and scale it alone, especially after the disposal of its Clinical AI arm.
To stay competitive, has elected to leverage Surgical Science's diverse portfolio that offers product bundling and cross-selling opportunities, enhancing value for customers and ultimately attracting a wider customer base. Furthermore, Surgical Science's much larger marketing budget and distribution networks can be effectively leveraged to achieve scale.
As the medical simulation market continues to consolidate, it has become increasingly difficult for small players to remain competitive. Hence, the acquisition of by Surgical Science is a logical and sensible win-win that should offer an efficient return of proceeds from the GE sale to shareholders, and an opportunity to further diversify and grow for Surgical Science's shareholders.
The combined entity is set to benefit from the rapid growth of the medical imaging AI market, projected to grow at a CAGR of 34.7% between 2022 and 2029.
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