2. Acquisitions and Divestiture

On October 1, 2013, the company acquired all of the outstanding shares of Medafor, Inc. (“Medafor”), a privately-held developer and supplier of plant-based hemostatic agents. The purchase consideration included an up-front cash payment of $203.7 million and future contingent payments of up to an additional $80 million based on specific revenue-based milestones through June 30, 2015. The company has not yet completed the initial purchase accounting due to the timing of this acquisition.

On September 4, 2013, the company entered into a definitive agreement to acquire Rochester Medical, Inc. (“Rochester Medical”), a publicly-held developer and supplier of silicone urinary incontinence and urine drainage products, for a purchase price of $20 per share, or approximately $262 million in the aggregate to be paid at closing. The transaction is expected to close in 2013, and is subject to customary closing conditions, including approval by the shareholders of Rochester Medical as well as regulatory approvals.

On August 29, 2013, the company acquired early stage technology from 3DT Holdings LLC (“3DT”), providing the company with rights to develop and commercialize a novel technology related to peripherally inserted central catheters (“PICCs”). 3DT received an up-front cash payment of $29.5 million and is eligible for milestone payments of up to $5 million based upon regulatory product approval. The company recorded the up-front payment as a research and development expense.

On July 29, 2013, the company acquired all of the outstanding shares of Loma Vista Medical, Inc., a privately-held company specializing in the development and commercialization of aortic valvuloplasty products, which use noncompliant fiber-based balloon technology. The total purchase consideration of $39.4 million included an up-front cash payment of $32.5 million and the fair value of contingent consideration of up to $8.0 million. The fair value of the assets acquired resulted in the recognition of core technologies of $20.6 million, deferred tax liabilities of $14.7 million, primarily consisting of intangible assets, goodwill of $8.6 million, and other net assets of $4.9 million. The goodwill is not deductible for tax purposes. An in process research and development (“IPR&D”) asset of $20.0 million was recorded for the development of a next generation valvuloplasty product. The fair value of the IPR&D asset was determined based upon the present value of expected future cash flows adjusted for the probability of technological and commercial risk, utilizing a risk-adjusted discount rate of 25%. The company has not yet finalized the purchase accounting, which may be adjusted as further information about conditions existing at the acquisition date become available.

On June 27, 2013, the company reached a definitive agreement to sell certain assets and liabilities of its electrophysiology division (“BEP”) to Boston Scientific Corporation (“Boston Scientific”) for $275 million in cash. The transaction is expected to be completed in 2013, subject to certain regulatory and customary closing conditions. The company expects to record a gain on the sale when the transaction is completed, which will include, among other things, assets and liabilities held for sale, and the de-recognition of a portion of goodwill.

Assets and liabilities held for sale associated with BEP include the following:


(dollars in millions)	September 30, 2013
Inventories	$	14.4
Other current assets		0.4
Net property, plant and equipment		2.6
Other intangible assets, net		7.0

	$	24.4

Accrued expenses	$	1.8
Accrued compensation and benefits		0.8

	$	2.6

	$	21.8

The company has agreed to provide contract manufacturing and other transition services to Boston Scientific for up to five years following the closing date. Due to the company’s continuing involvement in the operations of BEP, the criteria for reporting the results of BEP as a discontinued operation were not met.