Cantel Medical Acquires Crosstex International

question 66

Essay

Cantel Medical Acquires Crosstex International
On August 3, 2005, Cantel Medical Corporation (Cantel), as part of its strategic plan to expand its infection prevention and control business, announced that it had completed the acquisition of Crosstex International Incorporated (Crosstex). Cantel is a leading provider of infection prevention and control products. Crosstex is a privately owned manufacturer and reseller of single-use infection control products used primarily in the dental market.
As a consequence of the transaction, Crosstex became a wholly owned subsidiary of Cantel, a publicly traded firm. For the fiscal year ended April 30, 2005, Crosstex reported revenues of approximately $47.4 million and pretax income of $6.3 million. The purchase price, which is subject to adjustment for the net asset value at July 31, 2005, was $74.2 million, comprising $67.4 million in cash and 384,821 shares of Cantel stock (valued at $6.8 million). Furthermore, Crosstex shareholders could earn another $12 million payable over three years based on future operating income. Each of the three principal executives of Crosstex entered into a three-year employment agreement.
James P. Reilly, president and CEO of Cantel, stated, "We continue to pursue our strategy of acquiring branded niche leaders and expanding in the burgeoning area of infection prevention and control. Crosstex has a reputation for quality branded products and seasoned management." Richard Allen Orofino, Crosstex's president, noted, "We have built Crosstex over the past 50 years as a family business and we continue growing with our proven formula for success. However, with so many opportunities in our sights, we believe Cantel is the perfect partner to aid us in accelerating our growth plans."
-What factors might cause Crosstex's net asset value to change between signing and closing of the agreement of purchase and sale?

Comprehend the conditions under which partnership dissociation is considered rightful or wrongful.

Grasp the implications of partner liability for actions within the partnership.

Know the process and components involved in winding up a partnership.

Understand the liability implications for partners upon dissociation or retirement from a partnership.

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Definitions:

Costs to Society

The total burden that societal behaviors, decisions, or policies place on the welfare of the community, including both direct costs and indirect consequences.

Total Surplus

The sum of consumer surplus and producer surplus; a measure of the overall benefit to society from the production and consumption of goods or services.

Market Price

The present cost at which a service or asset is available for purchase or sale in a specific market.

Total Surplus

The sum of consumer and producer surpluses, representing the total net benefit to society from the production and consumption of goods and services.