Medical Action Industries agrees to $208M buyout offer from Owens & Minor

Medical Action Industries Inc., a Brentwood-based maker of burn dressings, surgical marking pens and hats for newborns, has agreed to a $208 million buyout by its largest customer, Owens & Minor Inc., the companies announced Wednesday.

The deal calls for Owens & Minor, based in Richmond, Virginia, to acquire all outstanding shares of Medical Action for $13.80 per share. Shares of Medical Action closed Wednesday at $13.68, up 93.49 percent.

The impact of the deal on Medical Action's workers and Long Island facilities remained unclear. Neither company responded to requests for comment. The formal merger agreement said that Owens & Minor does not contemplate layoffs or an early retirement program before closing the deal.

The acquisition of Medical Action is the latest in a string of corporate and private equity buyouts of Long Island's publicly traded companies.

In May, Plainview-based aerospace contractor Aeroflex Holding Corp. agreed to be acquired by Cobham PLC, a British aerospace company, for $1.46 billion. In April, Akorn Inc., based in Lake Forest, Illinois, announced that it had completed its acquisition of Amityville-based drugmaker Hi-Tech Pharmacal Co. for $640 million in cash. In December, Manhattan private equity firm Wasserstein & Co. completed a $340 million purchase of Globecomm Systems, a wireless communications provider based in Hauppauge.

Medical Action, which employs 815 people, posted $287.8 million in net sales from continuing operations for the fiscal year ended March 31. Owens & Minor, a distributor of medical and surgical supplies ranked 303rd on the Fortune 500, accounted for about 45 percent of those sales.

"Our companies have enjoyed a highly collaborative relationship for over 35 years, are built around similar cultures and values and are respected throughout the health care community," said Medical Action chief executive Paul D. Meringolo.

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The deal is subject to federal antitrust review and must be approved by Medical Action's shareholders.

Medical Action agreed not to solicit alternative suitors, and Owens & Minor will have the opportunity to match any competing bids, according to a government filing. If Medical Action's board rescinds its recommendation for the buyout agreement in favor of another offer, the company must pay a breakup fee of $9.3 million to Owens & Minor.

"The acquisition of Medical Action is consistent with our strategic focus and a natural extension of Owens & Minor's core capabilities as we look to broaden our service offering," said Owens & Minor chairman and CEO Craig R. Smith.

Owens & Minor estimated annual pretax cost savings related to the deal of $10 million to $12 million by the end of 2016.