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Surprise M&A announcement: Killing two birds with one stone

M&A announcement

i-SENS announces 100% acquisition of test strip customer AgaMatrix

• AgaMatrix is a long-time customer of i-SENS, with a relationship stretching back to 2006. The firm supplies internally produced blood glucose meters, as well as test strips made by i-SENS, in the US and Europe. We expect the acquisition to bolster i-SENS’s UK market share to the 20% level.

• The deal marks i-SENS’s second M&A in the US, following the Coag-Sense acquisition in 2017.

• The deal is valued at W36.1bn (US$27mn), but the actual cash required will be W26.8bn due to the acquisition method (acquisition of existing shares + debt/equity swap). The deal is set to close on Jun. 16.

• The acquisition is unlikely to be burdensome for i-SENS, given the company’s cash holdings of W61.9bn and debt ratio of 53.7% as of end-1Q23.


Analyst’s insights

Killing two birds with one stone: Distribution channels and earnings growth

• 1) Access to distribution channels: AgaMatrix counts CVS Pharmacy (US), Sanofi (Europe), and Alliance Healthcare (Europe) as major customers. The acquisition will give i-SENS access to new distribution channels in the US and Europe, which should provide a significant boost not only to the self-glucose monitoring business but also to the continuous glucose monitoring business (new growth engine).

• 2) Earnings improvement: AgaMatrix sources test strips from i-SENS for around W20bn and generates annual revenue of roughly W60bn. As such, we expect the deal to add about W40bn to i-SENS’s revenue.

• Along with top-line expansion, we expect profits to improve. AgaMatrix brings in operating profit of around W4-5bn, yielding an OP margin of 7-9%. While profitability is not particularly high, the deal should still lift i-SENS’s OP margin by more than 1%p, providing some breathing room for the company as it faces a number of cost increases this year.

• i-SENS is currently trading at a 12-month forward P/E of 15x (in line with its three-year average of 15x and a discount to the peer average (of 20x).







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