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Apollo Endosurgery buys Allergan’s obesity unit

Purchase prie could rise to US$110 million

Apollo Endosurgery has completed the acquisition of the obesity intervention division of Allergan, which manufactures and sells weight loss solutions comprised of the Lap-Band adjustable gastric banding system and the Orbera intra-gastric balloon system.

“With worldwide obesity numbers reaching epidemic levels, the acquisition of the Lap-Band and the Orbera technologies places Apollo Endosurgery in a leadership position to provide surgeons and patients with innovative and less invasive solutions in the fight against obesity,” said Dennis McWilliams, President and CEO of Apollo Endosurgery. “By expanding both our product portfolio and adding talent to our team, this acquisition will be a catalyst for growth as we continue to advance technologies in the fields of bariatric and minimally invasive surgery.”

Apollo, who announced the acquisition in October 2013, will purchase the unit for up to US$110 million. This total includes an upfront cash payment of US$75 million, a minority equity interest in Apollo by Allergan of US$15 million, and up to US$20 million in additional contingent consideration to be paid upon achievement of certain regulatory and sales milestones.

The deal comes after a year of speculation, since the Allergan announced they were planning to sell the unit in October 2012. Some sources on Wall Street suggested that the unit would be snapped up by a private equity firm, others claimed a more well established medical device firm, whilst it has also been suggested a pharmaceutical company (with obesity drugs in the pipeline) may take the plunge.

Apollo certainly faces a tough challenge turning round the units fortunes, which has seen its share of the bariatric surgery market dropped from a high of around 40% to as little as 30%, according to some estimates. Industry analysts expect that the unit’s share of the market will continue to fail given the rise in the number of sleeve gastrectomy procedures.

Nevertheless, it is certainly an interesting acquisition by Apollo Endosurgery and one which the whole bariatric community will watch very closely over the coming years.

Allergan acquired the Lap-Band business in 2006 as part of a US$3.1bn merger with medical aesthetics company Inamed, along with a line of breast implants.

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Apollo Endosurgery


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