Teleflex's (TFX) CEO Benson Smith on Acquisition of Vascular Solutions Conference Call (Transcript)

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Teleflex Incorporated (NYSE:TFX) Acquisition of Vascular Solutions Conference Call December 2, 2016 8:00 AM ET

Executives

Jake Elguicze - Treasurer and VP, IR

Benson Smith - Chairman and CEO

Liam Kelly - President and COO

Thomas Powell - EVP and CFO

Analysts

Brooks West - Piper Jaffray

Larry Keusch - Raymond James

Kristen Stewart - Deutsche Bank

Matt Taylor - Barclays

David Lewis - Morgan Stanley

Dave Turkaly - JMP Securities

Richard Newitter - Leerink Partners

Mike Matson - Needham and Company

Operator

Good day, ladies and gentlemen and welcome to the Teleflex Incorporated Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instruction] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference, Mr. Jake Elguicze, Treasurer and Vice President of Investor Relations. Sir, you may begin.

Jake Elguicze

Good morning,, everyone, and thank you for joining us on this conference call to discuss the announcement we made this morning regarding the acquisition of Vascular Solutions by Teleflex.

The press release and slides to accompany this call are available on our website at www.Teleflex.com. As a reminder this call will be available on our website, and a replay will be available by dialing 855-859-2056 or for international calls 404-537-3406, passcode 31448476.

Participating on today’s call are Benson Smith, Chairman and Chief Executive Officer; Liam Kelly, President and Chief Operating Officer; and Thomas Powell, Executive Vice President and Chief Financial Officer.

Before we begin, I’d like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides. We wish to caution you that such statements are in fact forward-looking in nature, and are subject to risks and uncertainties, and actual events or results may differ materially.

The factors that could cause actual results or events to differ materially include, but are not limited to factors made in our press release today, as well as our filings with the SEC including our Form 10-K which can be accessed on our website.

With that I’d like to now turn the call over to Benson to discuss the Vascular Solutions transaction.

Benson Smith

Thanks, Jake, and good morning everyone. I'm excited to talk to you this morning about the announcement we made regarding our agreement to combine Vascular Solutions with Teleflex. I'll start by providing overview of the strategic rationale behind the acquisition and an overview of the transaction. I will then turn the call over to Liam and Tom, and they'll provide an overview of Vascular Solutions as well as the summary of what the transaction means from a financial perspective. Finally, I'll provide a few closing remarks before opening the call up to Q&A.

To begin, we are extremely pleased to announce this definitive agreement with Vascular Solutions, as it represents a significant step forward in our strategy. Vascular Solutions is a truly unique company with differentiated technologies that serves the coronary and peripheral vascular markets. And this acquisition is very complementary to our existing portfolio.

The combination of Vascular Solutions and Teleflex significantly advances our offering of vascular and interventional solutions as we're adding over 90 proprietary products and services that are sold to international cardiologists, radiologists, electrophysiologists and vein specialists. Combined, the new Company will offer more than a 150 cardiac, vascular and interventional products globally. This acquisition also accelerates Teleflex's sales growth trajectory and provides significant sales channel opportunity.

Vascular Solutions has consistently generated greater than 10% revenue growth per year over last decade, and this acquisition positions Teleflex to enter new, faster growing markets. In addition, we expect to capitalize on Teleflex's significant international infrastructure to drive further penetration outside the U.S. with Vascular Solutions products.

Another reason we're excited about acquiring Vascular Solutions is its robust R&D pipeline. These products are differentiated, high growth and high margin products that have demonstrable clinical benefits that address complex interventions, radial artery catheterizations and embolization procedures, all areas of clinical practice that Teleflex's knows a lot about.

Finally, this acquisition has a compelling financial profile that substantial improves Teleflex's revenue growth, margins, earnings and cash flow generation capabilities for years to come. We expect that this transaction will be accretive to adjusted earnings per share in 2017 including the impact of incremental interest expense associated with financing of transaction. Importantly, this transaction meets all of the M&A objectives we've been talking about for the last several years, which include a product portfolio that fits into our existing strategic business unit franchises and call points, thereby allowing significant synergy generation; products that provide a superior clinical benefit to existing alternatives and the cost benefit to hospitals; long product life cycles has benefit from patent protection; and the ability to further improve our financial profile. This transaction also bolsters our leadership and management team with the additions of key members of the Vascular Solutions leadership team who will be instrumental in continuing to drive the business forward. We look forward to welcoming them into the Teleflex's family.

Turning to the details of transaction. Teleflex will be purchasing Vascular Solutions for $56 per share for transaction value of approximately $1 billion. This represents a revenue multiple of approximately 5.4 times using the midpoint of their 2017 financial guidance that was previously provided by Vascular Solutions. And while this transaction is a bit larger in terms of purchase price than ones we've done historically, this management team has a proven track record of successfully integrating acquisitions and quickly delevering. And that is something we believe will occur with this acquisition as well. It is important to understand that the completion of this transaction will not prevent Teleflex from completing other strategic initiatives such as distributor-to-conversions or technology acquisitions where we will continue to be able to fund through free cash flow generation.

As stated many times in the past, Teleflex intends to maintain its debt to adjusted EBITDA at approximately three times over the long-term. This transaction has been unanimously approved by both Teleflex and Vascular Solutions boards and is subject to approval by Vascular Solutions shareholders, regulatory approval and other customary closing conditions. We expect this acquisition to close during the first half of 2017 and for it to be accretive in 2017 adjusted earnings per share. During 2018, or the first full fiscal year in which the acquisition will be part of Teleflex, we expect Vascular Solutions to deliver approximately $0.50 in adjusted earnings per share accretion and then to be increasingly accretive thereafter.

That completes my prepared remarks. I'd like to now turn the call over to Liam to provide you with an overview of Vascular Solutions. Liam?

Liam Kelly

Thank you, Benson, and good morning everyone. It is a pleasure to be speaking with you today. Founded in 1997 Vascular Solutions is an innovative medical device company that focuses on developing clinical solutions for minimally invasive coronary and peripheral vascular procedures. The company’s product line consists of more than 90 proprietary products and services that are sold to interventional cardiologists, interventional radiologists, electrophysiologists and vein specialists through its direct U.S. sales force and international independent distributor network.

They have approximately 570 employees including 106 direct sales people within the United States. Outside of the United States, they work through a network of 42 independent distribution companies that cover 57 countries. Teleflex's international footprint will help accelerate product adoption and growth overseas.

From a call point perspective, for the first nine months of 2016, approximately 74% of their sales were of products and services used in the interventional cardiology market, 13% in the physiology [ph] market, 9% in the interventional radiology markets and 4% in the electrophysiology market. But from a geographic perspective, for the first nine months of 2016, approximately 81% of their revenue was generated within the United States and the international sales accounted for approximately 19%. It is important to understand that as of first nine months of 2016, approximately 80% of their revenue was generated by their top eight selling products. This should make the integration of our two companies easier and allow our combined sales force to drive further revenue growth in the future.

Over the past decade, Vascular Solutions’ revenue growth performance has been incredibly consistent as evidenced by over 10 consecutive years of greater than 10% revenue growth. We fully expect this revenue growth to continue in the future and similar to Vidacare, anticipate the Vascular Solutions will add approximately 1% per year for the Teleflex constant currency revenue growth rate for the next several years.

That completes my prepared remarks. And at this time, I’ll turn the call over Tom for him to provide you with a financial overview of the transaction. Tom?

Thomas Powell

Thank you, Liam, and good morning, everyone. This transaction has a very compelling financial profile and it meets multiple key criteria that we look for an acquisition.

Liam just mentioned that similar to Vidacare, this transaction substantially improves Teleflex's ability to consistently generate revenue growth in the mid single digits. In addition, given the differentiated nature of the product line, this transaction is expected to meaningfully accelerate our gross and operating margin profile.

More specifically, we anticipate that by 2018, Vascular Solutions will add approximately 80 basis points of growth to the base Teleflex adjusted gross margin and add approximately 100 basis points of growth to the base Teleflex adjusted operating margin. We expect for continued meaningful market expansion beyond 2018 as integration synergies become fully realized. In short, this transaction further supports our ability to grow our topline in the 5% to 6% level over the next few years while accelerating our adjusted growth and operating margins.

This acquisition also puts to work existing balance sheet capacity. As of September 2016, our leverage ratio was approximately two times as defined for our credit facility definition. Immediately following this transaction, we expect leverage to increase above our longer target of three times leverage. However, we expect that continued earnings momentum from Teleflex’s base business combined with synergies from the merger will allow us to quickly delever.

We anticipate funding this acquisition at closing through a combination of a new $750 million senior secured term loan facility coupled with drawing down on our revolver by approximately $250 million. Following the completion of the transaction, we may seek to opportunistically issue senior unsecured notes to more permanently finance the transaction. And if we were to issue new senior unsecured notes, the proceeds received would be used to either repay borrowings under the revolver or the new term loan.

From a return standpoint, we expect to generate return on invested capital that leads to Company’s cost of capital in the fourth year, and comfortably exceeds the Company's cost of capital in the fifth year. Further, the acquisition is expected to be accretive to adjusted earnings per share in 2017, deliver approximately $0.50 of adjusted earnings in 2018 and to be increasingly accretive thereafter.

Given the highly synergistic nature of the two companies, our adjusted earnings per share expectations, including assumptions that we’ll be able to generate synergies of between $40 million to $45 million by 2019 or the second full year, post close. And finally, I would like to point out that the transaction is not conditioned on financing as we have obtained a bridge finance commitment for JPMorgan. As I stated earlier, we intend to fund the transaction at closing, we’ll make sure pre-payable [ph] bank debt and we do not anticipate drawing on the bridge.

That completes my prepared remarks. I will now turn the call back over to Benson, for closing.

Benson Smith

Thanks, Tom. In closing, we’re very excited about this highly strategic and synergistic transaction. It’s our belief that the combined company will offer tremendous benefits to the customers who purchase our products, as well as the patients who use them. We anticipate that Vascular Solutions will accelerate the Teleflex sales growth trajectory, provide an opportunity to leverage our direct sales channel, improve our R&D pipeline and increase our adjusted gross and operating margins for several years to come. Finally, we believe that this transaction creates value for our shareholders as we expect to drive significant adjusted earnings per share in the future.

That completes my prepared remarks. And at this time, I’ll turn the call back to the operator for Q&A, Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the Brooks West with Piper Jaffray. Your line is now open.

Brooks West

Good morning and good to see both companies earlier this week at our conference. Congratulations on the deal. Couple of questions from me, just, Liam, I’d love to learn a little bit more where you see kind of the low-hanging fruit especially on the revenue synergies? Is it the combination of the products with your -- and the sales forces; is it the OUS opportunity? Where do you see kind of the immediate opportunity to hit the accelerator?

Liam Kelly

So, it’s a combination of both, Brooks. We have approximately a similar sized business globally in the interventional and cardiac area. Our interventional business within our vascular business unit and our cardiac business is reported in the all other category for Teleflex. And also, our significant international channel, I will just give you a brief example, Vascular Solutions has not registered the guideline or the turnpike in China for example. We’ve a significant channel opportunity within the Chinese market to accelerate growth into the future. And I think that their track record of over 10% growth for the last ten years, we believe that combining that with our organization in the in interventional cardiology and radiology suite in particular, will help to drive growth, not only in Vascular Solutions but also in Teleflex; it’d be synergistic to Teleflex as well from a growth perspective.

Brooks West

Great. And then, I guess two more questions for me. This gets you further into interventional medicine and interventional cardiology in particular, potentially hundreds of tuck-ins you could do here. Should we think about this area of cardiovascular medicine as an increased focused for you in terms of both growth and acquisitions?

Benson Smith

So, I would say, Brooks, the answer to that is yes. We’ve had to shy away from sort of smaller, single product tuck-ins that were in that space, because we didn’t feel we had enough of a sales presence to really capitalize on it. And I think our thought is it opens the door to allow those opportunities that we had to say no to in the past.

Brooks West

Okay, helpful. And then, I guess last for me, there are some big opportunities in the vascular pipeline. The freeze-dried plasma opportunity in particular was something that was held out to be transformative for that company. I would love to get your thoughts just on that opportunity and how that might fit into your product mix. Thanks.

Benson Smith

So, we review that as part of our due diligence; it's one of the product areas where we have a lot of enthusiasm for ourselves.

Liam Kelly

And Brooks, I'll just add to that, if you don't mind Benson. We already, through the Vidacare product portfolio, have a call point within the military and we have a strong relationship in that specific call point, which will only help us with the freeze-dried plasma opportunity. So, that was a key part of our focus as well.

Operator

Thank you. And our next question comes from Larry Keusch with Raymond James. Your line is now open.

Larry Keusch


So, a couple of quick questions. First, could you talk a little about the double-digit growth that you’ve talked about for Vascular Solutions over the past decade, and again, I'm not that familiar with the Company but what's been the organic profile of growth for the company?

Liam Kelly

So, it has been almost all organic. They made a small acquisition a couple of years ago, a company that had some technologies that was based out of Ireland. But other than that, it has been pretty much organic. Some of the key products within their portfolio that's driving that growth, Larry, is a product called the GuideLiner, which is the interventional cardiology suite and a turnpike catheter that was launched in the last year, which is driving over 300% growth year-over-year, so an exciting portfolio of products. They also have a range of micro introducer kits that are growing quite well, vein catheter reprocessing that through Q3 grew at about -- and all of these are in the high single up into the double digit. So, the vein reprocessing through Q3 was about 20%; micro-introducers over 20% as well, and radial access products growing in the mid teens. So, it's -- most of it has been organic, Larry, which is clearly something that we're quite excited about. And on top of that, they have a robust pipeline of R&D products coming through for the GuideLiner; they just recently launched the TrapLiner, which will extend the life of that GuideLiner product and actually make it attractive to a broader range of interventional cardiologists.

Larry Keusch

Okay, terrific. And then, two other questions. So, you mentioned, Tom, the 40 to 45 million in synergies. I'm wondering if you could help us understand what's captured in driving that number and where could there be potential opportunities to do better than that.

Thomas Powell

Sure. Well, you can imagine, we're going to look at all aspects of combining the two businesses, and we opportunities in the revenue lines, supply chain, and SG&A. So, we would love to provide a lot of detail on the transaction. What we'd like to first do is we have to close it, work through the integration planning and be in a position then to provide more specific details. As far as timing, our expectation is to close sometime in the first half. And we're currently talking about an analyst day event probably that timeframe. And I think that would provide both the right forum and timing to go into a lot more specifics on the opportunities.

Larry Keusch

Okay. And then last one, and perhaps this is for Benson or Liam. Obviously, you’ve already touched upon the OUS opportunities and the strength of the distribution that Teleflex has. Again, could you maybe just walk through -- and I know you mentioned product registrations in China but where do you see the geographic opportunities to take the Vascular Solutions products and put it through your existing channels?

Benson Smith

So, we’ll be working through that as we work through our integration plan, Larry, but clearly we have a very broad footprint in key markets in Europe. We are direct in some of the key markets now in Asia as part of our dealer-to-direct strategy and each one of those markets will be potential opportunity for us.

Operator

Thank you. And our next question comes from Kristen Stewart with Deutsche Bank. Your line is now open.

Kristen Stewart

Just with respect to the transaction, can you give us a little bit of I guess background on whether this was a competitive process and just why now in terms of moving forward with this transaction relative to some another opportunities that might be out there?

Benson Smith

I think the best -- the answer to that probably can come from reading Vascular Solutions’ own press release about their reasons for this being the time or inflection point where they wanted to sell the company. And I think they are best giving answers to that. I think the primary reason, to the last part of your question was, this is the best strategic fit of all the various things we've looked at over the past -- really since Vidacare and it has the best product trajectory, I think the best the improvement in terms of our overall margins and revenue advancement. So, we were much more excited about this opportunity than other things we've looked at.

Kristen Stewart

And then, just in terms of the sales growth rate, I know that you had mentioned this gives you, just to want to make sure I understood, greater confidence in achieving the 5% to 6% growth rate for keeping that now to a little bit more exceedable I guess, looking out longer term, given the double-digit growth rate that this brings?

Benson Smith

I certainly think that'll go into our calculation as we start to talk about our guidance into the future, yes.

Kristen Stewart

And then last question from me is as you look at the broader landscape, does this really give you the critical scale that you think you need within interventional cardiology and peripheral because it just still seems like relative to some of the other players, you may still be subscale, so just in terms of the key markets where now you'll participate, do you feel like you still have enough scale or should we look to really see bolt-ons from here or now within these two areas, more specifically longer term?

Benson Smith

Their strategy within this space has been remarkably like our broader strategy, which is to participate in segments where they really have a highly clinically differentiated product. They tend to be spaces that much larger players don't tend to spend as much time and resources on. And again their track record I think more than establishes the fact that's been a successful strategy for them. And when we look at we look at their ongoing R&D programs, they're in a number of really unique product offering areas that we think will -- that they will be able to invest and we would be able to combine with them and grow [ph] significant space in that call point.

Operator

Thank you. And our next question comes from Matt Taylor with Barclays. Your line is now open.

Matt Taylor

So, the first question I had is I guess I wanted to know if you could talk on a high level just in terms of where those synergies are going to come from. I know you will provide detail plans later but 40 to 45 is kind of a high number on a revenue base of 165 or with the accounts. So, I’m assuming that you've got a substantial portion of that baked in as revenue synergies. I guess, can you just talk about the components at high level to help us understand why you can get that big of a number?

Thomas Powell

Well, as we look at the synergy opportunities, certainly revenue is one component of it, but we see greater opportunity elsewhere as we look at combine the two businesses. So, revenue is a piece but not be the largest of the synergy opportunities.

Matt Taylor

Okay. And then, your closing date is pretty soon here. So, I'm assuming there is no overlap. I just wanted to know if you have looked through all the different products and felt like there is anything you might have to divest because there is lot of a little products here and kind of tough to analyze where the overlaps would be?

Liam Kelly

So, it’s our view that there is no significant overlap that would cause the divestiture of any of the key product categories. Obviously, we will refine that as we go through this closing process but we don’t anticipate any issues there.

Operator

Thank you. And our next question comes from David Lewis with Morgan Stanley. Your line is now open.

David Lewis

Good morning. Few questions here, sorry, may ask a few here. Firstly, Benson, just is this a 16% premium over the 90-day trading price and even narrower premium over the 30-day trading price, maybe in single digits, double digits, which is exceedingly rare. So, obviously, it makes you look good as a buyer but what's your conviction that you sort of understand the trajectory that this can continue to deliver double-digit revenue growth in light of the very narrow premium you are paying for the business?

Benson Smith

In a couple of words, very high. [Ph] We've spent a lot of time looking at each one of these business lines, where their growth is coming from, where their future growth is coming from. And I would say, we went through, as you might imagine, a very, very serve due diligence process. We have normally whatsoever that our premium or the modest premium we are paying as a result of some unforeseen or undisclosed problem that exists under the covers.

David Lewis

Okay, that's helpful. And then -- I want to hear what you have to say. So I think guys, it's actually very clear I think what shareholders wanted to hear. And then, Tom, it's a good solution [ph] the accretion is reasonable for the forward year. I guess in our model, I go out to year four, I know you are not going disclose what your cost of capital is. So, if I just assume that cost of capital is something close to 8%, we can’t get there based on the synergies that you are offering. So, in year four, is there some reason to believe that there is a material step up in synergies above that sort of $40 million, $50 million level or is there a tax dynamic to this transaction that we are probably not appreciating that that gets you to that sort of 8 plus percent number in year four because we're going to get accept it as closer to 4% to 5%? And then, I had one quick follow-up?

Thomas Powell

So, we do not expect to realize a meaningful tax benefit. Really what's driving the accretion and the value in the out years is a combination of continued revenue growth, margin expansion, and synergies which to the point you are raising, there is a certain level by 2018, we expect those to continue to build for the next couple of years as all the integration planning is fully realized.

David Lewis

Okay. By our math, you need a number that's well in excess of $60 million in synergies

and ‘19 and beyond to get to anything close to 8%. Does that kind of jive with your math because that’s 50% increase from the $40 million level of the year prior?

Thomas Powell

Well, I’ll defer on responding to that. We are going to guide to that number as we got to announce, provide more specifics as we finish the integration planning and lay out the detailed timeframe for all the synergies sometime later in 2017.

David Lewis

Okay, very clear. And lastly, Benson, just for you, I think you made some statements in the third quarter call that they got a lot of investor interest. And I think there were something around your interest in getting back to the U.S. And I think people interpreted that as a greater interest in the U.S. and less of it interest ex-U.S. in emerging markets, and here you are acquiring your largest acquisition in history, which is 80% U.S. So, here I am just wondering if you could expand upon, is that a real driver because that business had a really big U.S. mix, was that attracted to you about this asset? And then also comes to mind that this company has a dramatic amount of distributors ex-U.S., and given your success with distributor conversions, there may be a significant opportunity ex-U.S. Could just juxtapose sort of your interest in the U.S. market versus sort of that ex-U.S. opportunity that Vascular Solutions could offer? Thank you.

Benson Smith

So, our -- my statements on the call really reflected a somewhat longer term view about looking for growth in geographies and product lines that we thought were most sustainable over a long period of time. And certainly, when we look at an acquisition of this size, sustainability of growth and less exposure to volatility is an important ingredient in terms of what we are factoring. That being said, we also think in this particular case that it is a good opportunity for us to expand in the international front, certainly in many of the markets where we have identified as places where we are interested in China, India as an example.

Operator

Thank you. And our next question comes from Dave Turkaly with JMP Securities. Your line is now open.

Dave Turkaly

Looking at these products, it seem to be very similar from my standpoint from -- would appear to be similar from a manufacturing standpoint. So, I was curious how many facilities does Vascular Solutions have. And could manufacturing consolidation be part of the synergy number as well?

Liam Kelly

So, Dave, Vascular Solutions has six in total, about three of them are manufacturing facilities. They are consolidated in the Minneapolis area. So, we -- obviously, as we go through our integration plans and as we close this, we will give more details as to what our proposals are. But they have a very, very robust manufacturing organization and we think that they have done an excellent job; they manufacture very efficiently. These are accretive margin products because of that. But they have six facilities in total, to answer your question.

Dave Turkaly

Thanks for that. And maybe just one quick one from the modeling side, in terms of your sort of revolver and the incremental debt, can you just offer us a ballpark of what kind of rate you think you will be paying on the outstanding debt, post the deal?

Thomas Powell

So, the revolver borrowing is obviously a LIBOR based structure, but right now, we would think there will be in an around somewhere around 3% level on the revolver and term loan side based on where our leverage ratios are. And then for modeling purposes, we have considered the possibility that we could go on and put a high yield offering out there. So, we considered, higher rate associated with that and expect that potentially to be in the range of 5.5%.

Operator

Thank you. Our next question comes from Richard Newitter with Leerink Partners. Your line is now open.

Richard Newitter

Hi, thanks for taking the question, and congrats on the deal. I wanted to just ask two here. First, just maybe you could at a high level just compare or tell us what’s the most similar or different with respect to the integration process you foresee with Vascular Solutions compared to Vidacare and LMA, which were two very successful integration efforts, as you pointed out. Maybe just for investors to help us get a feel for how similar the process will be compared to those that increases your confidence that we will see a similar kind of delivery on the target you laid out? And maybe just with that, can you remind us what you’re targets were for accretion on Vidacare and LMA and kind of what actually outperformance you transpired, looking back?

Liam Kelly

So, I think that as we look at this, we see this being quite similar to the LMA transaction from the point of view of our approach. Slightly larger business than Vidacare, a more of a global footprint than -- so both companies have a global footprint, large number of distributors overseas, and as you know, the LMA integration was very successful one. Our management teams become very adapt at the integration process and the timing of it, the execution. And I’m not in a position to give you a specific number but, both LMA and Vidacare over delivered versus our expectation from when we began the process to when we finished the process.

Richard Newitter

Okay. And so, I guess there is not being in this transaction that you think is necessarily -- particularly better that think LMA was tricky for XY and Z reasons, Vascular Solutions will be even easier to integrate for some other kind of things that we’re not thinking about or vice versa? Is there anything that’s maybe a little bit more challenging that you foresee compared to something like LMA or are they pretty similar?

Liam Kelly

I would see them as pretty similar. LMA’s revenue generation and focus was in a narrow range of products. 80% of Vascular Solutions revenue comes from eight product categories; so from that regard, very, very similar to LMA. Vidacare was a narrower product portfolio; there were three main product categories within Vidacare. But we were very successful with LMA; so we see this very similar to that.

Benson Smith

And one addition to this is neither LMA nor Vidacare has had nearly as substantial portfolio of future R&D products in the mix. We’ve had a good opportunity to get to meet their key R&D team members; we’re quite enthusiastic about their potential to bring these products to market. So, that makes it little more challenging perhaps but I think what we're really enthusiastic about is the opportunity that’s contained within their new product shop.

Richard Newitter

That's helpful. And then, Benson, just on that, do you have any sense of the timelines as to when some of those bigger R&D initiatives could kind of see their way moving to market? Is that something we should think about 2019 to be odd, or could these actually materialize in the synergy target timeframe you’ve laid out?

Benson Smith

Yes. There's a good spread in terms of the timing of these products; some of them will hit as really soon as 2017. Liam referenced the product called the TrapLiner, which is just in the launching period right now. So, there's pretty good calendarization; it's not all 2019 for sure; it's a good spread in terms of the calendarization of those plans.

Operator

Thank you. And our next question comes from Mike Matson with Needham and Company. Your line is now open.

Mike Matson

Hi. Thanks for taking my questions. I guess, I was just curious with regard to Vascular Solutions, if Howard Root’s going to be sticking around. I think he was a pretty key part of their success over the years. And I know he had his hands in inventing a number of their key product lines. Thanks.

Benson Smith

So, again, I would refer you to their own press release regarding Howard’s plans and rationale. It was certainly one of the questions we asked and we agree that he certainly has played an instrumental part as he was going through his own legal difficulties, he had to entrust a good part of the day to day operating functions and product designs to others within the organization. And I would tell you, we were impressed that how ably they were able to perform while his interest and attention was elsewhere. So, we're quite comfortable and confident in the management team out there in terms of being able to move that company forward. There is some modest expertise in [indiscernible] which we went through the picture.

Mike Matson

Okay, thank you. And then, is there any overlap at all between the two companies’ product lines and is there any risk that you have to make any divestures of any of these Vascular products or your own products?

Liam Kelly

So, as I answered earlier, we don’t see that at this moment in time. Both sets of products are very, very complementary. And we don't see any difficulties with divesting of any part of either portfolio as we go through this, which is one of the attractive elements of this acquisition for us, but we work through that as we close this, but none anticipated.

Mike Matson

Okay. And then, just finally, Vascular has been really focused on kind of the niche opportunities within interventional cardiology and peripheral vascular. And so, is your intention to kind of maintain that focus, or are you trying to really build out kind of a broad-based interventional cardiology and peripheral business here with these product lines as kind of a starting point?

Benson Smith

So, this is evidenced by our strategy in other business lines. We like those niche products where you have long product life cycles where the [indiscernible] is much direct competition which gets down to simply price. And they've done a really good job with that strategy on their own and that's really where their R&D is really pointed towards in the future.

Operator

Thank you. And we have a follow-up question from Kristen Stewart with Deutsche Bank. Your line is now open.

Kristen Stewart

Hi, thanks for taking my follow-up. I just wanted to go back again, I know we're talking about the pipeline but in terms of the existing portfolio, where do you expect to see most of the growth in terms of these eight products. Are they mainly coming from more of the interventional cardiology business or more of the kind of peripheral side; maybe just help us understand where do you see the greatest growth opportunity?

Liam Kelly

So, we think that there's significant longevity in the GuideLiner, or especially with the TrapLiner that is just being launched, as we speak. So, that is in the interventional cardiology space. We also think that the turnpike that is in its first year of launch, which is in the interventional cardiology space, has significant growth opportunity over a multiyear period. And those are within the interventional cardiology. We also think that in the interventional radiology space, the micro-introducer kits, we think that has opportunity outside of the United States that we'll be exploring. Today Vascular Solutions have predominantly focused that in the United States. And clearly with our channel within the interventional radiology space, we see that as an opportunity.

Kristen Stewart

And are there any products within the portfolio that you don't think make sense that might be some opportunities pruning down the road?

Liam Kelly

So, not at this moment in time; most of their portfolio we see as making perfect sense to Teleflex is the different Vascular Solutions. And we don't see any divestiture at this stage.

Operator

Thank you. That concludes our question-and-answer session today. I would like to turn the conference back over to Mr. Jake Elguicze for closing remarks.

Jake Elguicze

Thanks, operator, and thanks everyone for joining us on the call today. This concludes the Teleflex Incorporated conference call. Have a good day.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone, have a great day.

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