Japan's Olympus Corp has agreed to buy British keyhole surgery specialist Gyrus Group Plc for 935 million pounds ($1.92 billion) in cash to bolster its position in the medical tools market.
Gyrus's board has recommended the 630 pence per share offer, which represents a 58 percent premium to the price on Nov. 16, the two companies said on Monday.
Gyrus shares leapt to an all-time high of 633p in early London trade while Olympus ended 2.3 percent higher at 4,410 yen in Tokyo.
Olympus, which is the world's top maker of medical endoscopes and a major producer of digital cameras, said the acquisition would boost its offering of tools that can remove or treat tissue in a less invasive manner than traditional surgery.
The operations of Gyrus and Olympus's Medical Systems Business are highly complementary and I am confident that this planned partnership will generate significant synergies and opportunities for both firms, Olympus President Tsuyoshi Kikukawa said in a statement.
Demand for minimally invasive tools and procedures is growing fast, reflecting the ageing of society in industrialised nations and advances in technology.
Gyrus is strong in radio-frequency devices and energy-based technologies for minimally invasive, or keyhole, surgical systems.
Olympus said the deal would create a medical systems business with revenues of about 360 billion yen ($3.27 billion) and the enlarged group would be in a unique position to act as a see and treat provider, handling both imaging and treatment.
Olympus said it would fund the acquisition through a combination of cash and a new debt facility.
Gyrus Chairman Brian Steer said the takeover offer represented an outstanding opportunity for shareholders.
But the deal marks a further shrinking of Britain's quoted small- and mid-cap healthcare sector.
British medical and biotech businesses have proved a rich hunting ground for international companies in recent years, with a range of smaller firms snapped up by international ones, notably drugmakers such as Pfizer Inc and Novartis AG.
Gyrus was advised on the deal by Bear Stearns and Morgan Stanley while Perella Weinberg Partners advised Olympus. (Editing by Mike Miller and Quentin Bryar)