Today, ICU Medical (NASDAQ:ICUI) is a stock that’s absolutely taking off. Trading more than 35% higher this morning, shares of ICUI stock have benefited from a relatively high-volatility day in certain sectors.
As a key player in the medical devices space, ICUI stock is one of many post-pandemic recovery plays investors have had their eye on of late. Accordingly, as more elective surgeries and infusion therapies go back to pre-pandemic levels, companies like ICU Medical stand to benefit.
As the company’s name suggests, many of the products provided by ICU Medical are used in the ICU. The company’s focus on infusion therapy products and monitoring systems are critical components of the hospital infrastructure.
Today, it appears ICU Medical has a key catalyst investors like. Let’s dive into what investors are watching with ICUI stock today.
ICUI Stock Surging on Acquisition Announcement
Today, ICU Medical has announced plans to acquire Smith Group PLC’s medical division. This deal is set to transform ICU Medical into an IV therapy company and provide various synergies and workflow improvements investors seem to like.
Indeed, in most acquisition deals, the acquirer tends to see its share price take a hit. That’s because investors tend to re-value each company based on the premium that is paid by the acquirer to take control of the target.
However, the pipeline of products and existing business ICU Medical is acquiring appear to have tremendous value. Or, at least investors in ICUI stock seem to think so.
As a result of the deal, the combined entity is expected to have revenues of approximately $2.5 billion. The total amount paid (via cash and equity) comes to approximately $2.35 billion. Accordingly, investors seem to like the upside this deal provides, relative to the price paid.
Other incentives could reportedly take this deal value higher, to as much as $2.8 billion. However, it appears investors approve of the structure of this deal, as well as the improved potential growth trajectory of ICU Medical following the combination.
CEO Vivek Jain commented that “the combination of these two businesses makes sense for the medical device marketplace and fits well with ICU Medical’s existing business.” Indeed, it appears investors agree with this sentiment and are content with buying up shares today.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.