Stryker’s Next Acquisition – Physio-Control
Medical device maker Stryker Corp. recently announced that it will buy Physio-Control, a manufacturer of emergency defibrillators and other emergency medical response products based in Redmond, Washington. According to Stryker’s press release, the deal is a $1.28 billion all-cash acquisition and is expected to close at the beginning of Q2 2016.
Physio-Control opened its doors in 1955. Since then, Physio-Control reports that it has become one of the Seattle area’s largest medical device manufacturers — it currently employs more than 1,400 people globally and posted $503 million in revenue in 2015. Stryker explains that the acquisition permits Stryker to expand its emergency medical services (EMS) business both domestically and abroad (specifically in Europe). Regarding the deal, Stryker Chairman and Chief Executive Officer Kevin Lobo states:
Physio-Control’s focused strategy and their culture will fit well within the EMS business of our medical division, further leveraging our existing call pattern. We look forward to welcoming the Physio-Control team to Stryker.
Stryker’s acquisition of Physio-Control follows on the heels of its recent agreement to purchase Sage Products LLC for $2.78 billion in cash and its recent agreement to purchase Synergetics USA, Inc.’s neuro portfolio in another all-cash transaction. Moreover, as reported by the Venture Capital Post, Stryker has said that more deals will be done by the company soon. Mr. Lobo has been quoted as saying that:
One of the reasons to postpone the share repurchase program was to make sure we still have the capacity, so this will not be the last deal that we do.
Stryker to Acquire Sage Products
According to its recent press release, Stryker Corporation has reached an agreement to acquire Sage Products, LLC from Chicago private equity firm Madison Dearborn Partners in a $2.775 billion cash transaction. Stryker describes itself as medical technologies company based in Kalamazoo, Michigan, specializing in orthopedic implants for hip, knee, and other replacement surgeries, as well as various medical-surgical, neurosurgical, and spinal technologies. According to its website, Cary, Illinois-based Sage develops products for prevention of hospital-acquired injuries and infections in patients and clinicians. Sage’s products include solutions for oral care, skin preparation and protection, patient cleaning and hygiene, turning and positioning devices and heel care boots.
Kevin Lobo, Chairman and CEO of Stryker, praised Sage’s “established leadership team and innovative products,” which “have driven consistent double-digit sales growth.” According to Lobo, the two companies share a “focus on offering products and services that support a mindset of prevention, specifically in the area of ‘never events’ such as hospital acquired infections.” The acquisition will “provide a consistent disposable revenue stream that will complement [Stryker’s] capital equipment offerings.”
Scott Brown, President and CEO of Sage Products, stated:
Sage is well-positioned for continued achievement and long-term success with Stryker, a company that understands our business, supports our goals and embraces our values.”
The transaction is expected to bring Stryker future tax benefits of over $500 million, as well as approximately 15 years of increased cash flows. According to Bloomberg, Madison Dearborn Partners will gain nearly 320% in the sale, having invested $350 million in Sage Products 3 years ago. The transaction is expected to close in the second quarter of 2016.
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