Blog Tag: Acquisitions
Teleflex announced on August 22, 2022 that it has reached an agreement to acquire Standard Bariatrics. Teleflex agreed to acquire Standard Bariatrics for a cash payment of $170 million at closing and could pay up to an additional $130M if Standard Bariatrics reaches certain commercial milestones.
Standard Bariatrics is a Cincinnati-based company that makes the Titan SGS® surgical stapler for bariatric surgery, among other products.
Teleflex claims to have a well-developed existing bariatric surgeon call point and a portfolio of surgical devices, including products for interventional cardiology, urology and vascular access. As part of the announcement, Liam Kelly, Chairman, President and Chief Executive Officer of Teleflex, stated the following regarding the acquisition:
The acquisition of Standard Bariatrics adds an exciting and differentiated product serving the large and growing sleeve gastrectomy market, which we estimate to be approximately 120,000 procedures annually in the U.S.
The announcement states that the deal is expected to close in the fourth quarter of 2022, subject to regulatory approval. Teleflex plans to finance the acquisition at closing through borrowings under its revolving credit facility based on the announcement.
Boston Scientific announced on August 15, 2022, that it acquired Obsidio, Inc. for an undisclosed fee. Obsidio has technology called the Gel Embolic Material (GEM™), which is used in minimally invasive blood vessel embolization. According to its press release, Boston Scientific intends to expand its interventional oncology and embolization portfolios.
An embolization treatment procedure uses a material to obstruct or reduce blood flow through a blood vessel. The treatment may be used to stop hemorrhaging, to stabilize blood vessel malformations, or to reduce blood flow to tumors, which are often highly vascularized.
Founded in 2019, Obsidio initially sought to commercialize technology relating to NIH-funded research on hemorrhage control and aneurysm treatment. Obsidio subsequently obtained FDA approval for GEM™ on July 1, 2022, claiming equivalence to Biosphere Medical’s EmboCube™ Embolization Gelatin. According to Obsidio, GEM™ is a semi-solid made up of bioresorbable gelatin, layered silicate, and tantalum powder. The material is delivered to a target vessel via catheter. As a semi-solid, the material is supposed to conform to the shape of the target vessel. Additionally, GEM™ is supposed to be shipped in a ready-to-use form, which, according to Boston Scientific, may save some preparation time relative to other embolization materials.
Boston Scientific is a multinational biomedical engineering company. In 2021, Boston Scientific spent over $4 billion across five acquisitions. Obsidio is the second of Boston Scientific’s acquisitions in 2022, the other being a $230 million deal for Synergy Innovation’s majority stake in M.I.Tech, a developer of a conformable, self-expanding metal stent called HANAROSTENT®.
ResApp Health recently announced its planned sale to Pfizer Australia, a wholly owned subsidiary of Pfizer Inc. Pfizer agrees it would acquire 100% of the shares for AUD $0.115 / share, for a total equity value of approximately AUD $100 million. ResApp directors announced a unanimous recommendation to sell, and their intent to vote their own shares accordingly. A shareholder vote is scheduled for June.
ResApp Health develops point of care diagnostics for telehealth that integrate with existing platforms. Their algorithms can diagnose disease from sounds. For example, one platform reportedly diagnoses respiratory problems based on the sound of a patient’s cough or breathing, and no physical contact is required.
The companies will also enter a Research & Development License Agreement to collaborate on products in the field of COVID-19.
In a statement, Pfizer Australia’s Lidia Fonseca stated that “this proposed acquisition and research collaboration add to our growing digital capabilities and bolster our efforts to pave a new era for digital health.” ResApp CEO Tony Keating expressed excitement, stating “the material premium and certainty of an all cash consideration is an attractive outcome for our shareholders.”
This acquisition would be the second for Pfizer this year. Earlier, it acquired ReViral, the developer of therapeutics for respiratory viruses, for $525 million.
Bioventus recently announced that its shareholders approved its agreement to acquire Misonix. Bioventus agrees to pay Misonix shareholders either 1.6839 shares of Bioventus class A common stock or $28.00 for each share of Misonix common stock held. The amount paid to Misonix shareholders results in an approximate valuation of $518 million for Misonix, based on share prices from around the time the acquisition agreement was reached. With the completion of this acquisition, Misonix will become a wholly-owned subsidiary of Bioventus.
Misonix develops minimally invasive therapeutic ultrasonic medical devices and regenerative tissue products for a variety of orthopedic applications. For example, Misonix is the developer of the BoneScalpel, an ultrasonic bone cutting tool. Additionally, Misonix is the developer of the Nexus, an ultrasonic surgical aspirator for precision hard and soft tissue removal.
In a press release, Bioventus’ CEO Ken Reali stated:
We are pleased by the outcome of today’s vote and thank our stockholders for supporting the acquisition. The combination with Misonix creates significant value and provides a deeper global portfolio of pain treatments, restorative therapies and surgical solutions for patients. We are excited to welcome the Misonix team to Bioventus.
Bioventus plans to accelerate the adoption of Misonix’s BoneScalpel and Nexus products through the footprint of Bioventus in the spine surgical solutions area. Bioventus also plans to augment its current lower extremity product offerings with Misonix’s products.
This acquisition is one of three acquisitions by Bioventus this year. Earlier this year, Bioventus acquired Bioness, the developer of neuromodulation and rehabilitation medical devices. Bioventus also has an agreement in place to acquire CertiHeal, the developer of the Agili-C implant.
Current Health is the developer of an AI-powered upper-arm wearable and related software platform that measures a patient’s respiration, pulse, oxygen saturation, temperature, and movement. The real-time measurement device received Class II clearance from the FDA for post-acute care, marking the first time that an end-to-end, passive RPM wearable and platform has received clearance from the agency.
In discussing the agreement between Best Buy and Current Health, Christopher McCann, CEO of Current Health stated:
Over the coming decade, significantly more healthcare can be delivered in the home. We started Current Health to make that exciting transition radically easier for healthcare providers to achieve . . . Best Buy has unparalleled physical reach, world-class supply chain logistics, and trusted support services–allowing us to provide a high-touch consumer experience, at scale. We’re excited to join with Best Buy Health to move safe and effective healthcare into the home globally.
This acquisition will continue Best Buy’s investment in consumer-side health care technologies. For example, Best Buy previously acquired GreatCall Inc. (now Lively Inc.), a personal emergency response subscription service, for $800 million in 2018 and acquired Critical Signal Technologies, Inc., a senior-focused remote patient monitoring provider, for $125 million in 2019. The significant investment into the healthcare technology space for the consumer electronics company follows what Best Buy sees as a major growth opportunity. In a March 2021 earnings call, Corie Berry, CEO of Best Buys, stated, “We plan to invest in people, product development and the ongoing development of our health technology platform and our data analytics and intelligence engines.” Deborah Di Sanzo, President of Best Buy Health, further elaborated by stating:
The future of consumer technology is directly connected to the future of healthcare. We have the distinct expertise in helping customers make technology work for them directly in their homes and by combining Current Health’s remote care management platform with our existing health products and services, we can create a holistic care ecosystem that shows up for someone across all of their healthcare needs.
J&J Accepts Platinum Equity’s $2.1B Offer for its LifeScan Subsidiary; Receives Offer for Advanced Sterilization Products Subsidiary
On June 12, 2018, Johnson & Johnson announced acceptance of an offer from Platinum Equity, a private investment firm, to acquire its diabetic monitoring unit, LifeScan, for approximately $2.1 billion. In response to the acquisition, Platinum Equity Chairman and CEO Tom Gores said
We are committed to putting our financial resources and global operating expertise to work in support of the company’s core mission to improve the quality of life for people living with diabetes.
LifeScan offers blood glucose monitoring products to patients for the care of diabetes under the OneTouch brand. According to the press release, LifeScan business earned approximately $1.5 billion in revenue in 2017. Platinum Equity previously reported that LifeScan President Valerie Asbury would continue leading the business.
In February 2018, Bloomberg reported that Johnson & Johnson was seeking to sell off its sterilization products division for as much as $2 billion. The selling price has increased as Johnson & Johnson announced on June 6, 2018, receipt of a binding offer from Fortive Corp. to acquire Advanced Sterilization Products (ASP), a division of Ethicon Inc., for approximately $2.8 billion. If accepted, Johnson & Johnson indicated it expects the proposed transaction to close no later than early 2019.
ASP sells sterilization products under the STERRAD and CYCLESURE brands. ASP’s high level disinfection products are sold under the EVOTECH brand. Johnson & Johnson reported that ASP earned approximately $775 million in revenue in 2017.
According to the Straits Times, QT Vascular, a Singapore-based medical device company, reached an asset purchase and option agreement to sell its intellectual property rights to some of its non-drug coated coronary products, such as its Chocolate XD® and Glider™, to Teleflex Life Sciences Unlimited Company and Teleflex Incorporated (“Teleflex“). The agreement gives Teleflex the option to purchase QT Vascular’s drug coated product, the Chocolate Heart, which is still being developed.
Under the agreement, Teleflex may pay up to $98.4 million in cash—$26.2 million for the non-drug coated coronary products, $65.6 million for the drug coated coronary product, and up to an additional $6.6 million upon the achievement of certain sales revenue milestones. According to the Straits Times, the total value of the deal may be greater than $100 million, which exceeds QT Vascular’s market value of $36.3 million as of May 23, 2018.
Eitan Konstantino, CEO of QT Vascular, stated:
We are excited that Teleflex, one of the world’s leading medical device companies, chose to acquire our coronary products and to obtain a license to our extensive coronary IP portfolio. We will work closely with Teleflex’s team to bring our pioneering drug coated coronary product, Chocolate Heart™, to the US market.
According to QT Vascular’s press release, the deal is pending approval by its shareholders. As reported in the Straits Times, QT Vascular and Teleflex are also negotiating other business agreements, including supply agreements related to the products QT Vascular is selling to Teleflex.
The press release states that QT Vascular will independently continue its development of other products, such as a planned Investigational Device Exemption clinical trial of its differentiated drug coated percutaneous transluminal angioplasty balloon (Chocolate Touch®) in the U.S.
This deal follows the January 2018 announcement of QT Vascular’s sale of its non-drug coated Chocolate® PTA balloon catheter to Medtronics for $28 million.
On February 20, 2018, Johnson & Johnson Medical Devices Companies announced the acquisition of Orthotaxy, a privately-held developer of software-enabled surgery technologies, including a differentiated robotic-assisted surgery solution. According to Johnson & Johnson, this technology is currently in early-stage development for total and partial knee replacement, and the Johnson & Johnson Medical Devices Companies plan to broaden its application for a range of orthopaedic surgery procedures.
Orthotaxy was founded in Grenoble, France, in 2009 by robotics entrepreneur Stéphane Lavallée and has focused on surgical planning software that allows surgeons to plan implant placement on preoperative CT or MRI images. Orthotaxy has also developed patient-specific surgical guides that enable surgeons to insert surgical instruments and perform surgery in accordance with a planned strategy.
Orthotaxy currently has 3 pending published patent applications: U.S. Patent App. Nos. 14/667,623, 15/032,223, and 15/032,225. The ’623 application and the ’223 application are directed to methods for constructing a patient-specific surgical guide (e.g., element 1 in FIG. 4 of the ’623 application reproduced below) based on a patient’s 3-D medical image.
The ’225 application is directed to a method for planning a surgical intervention that comprises computing and displaying a pseudo-radiographic images along with the representation of an implant in a patient’s anatomical structure, as illustrated in FIG. 2 of the ’225 application reproduced below.
Regarding the acquisition, Company Group Chairman Ciro Roemer stated: “Our goal is to bring to market a robotic-assisted surgery technology that is an integral part of a comprehensive orthopaedics platform, delivering value to patients, physicians and healthcare providers across the episode of care. The team at Orthotaxy has significant expertise and passion in developing this platform, and we aspire to bring to market a differentiated technology that helps improve clinical outcomes and increases patient satisfaction.”
According to Johnson & Johnson, financial terms of the acquisition will not be disclosed.
Wright Medical Group recently announced the acquisition of IMASCAP SAS for $88 million. According to the press release, Wright Medical Group (NASDAQ: WMGI) is a publicly traded company focusing on extremity joint replacement and bio-orthopedic material development. IMASCAP SAS focuses on developing software for preoperative joint replacement surgery.
According to the press release, the companies have had a previous relationship where Wright Medical Group used IMASCAP’s Genosys technology in its BLUEPRINT 3D planning software. The technology is said to allow surgeons to visualize potential movement in a shoulder joint so as to determine the best type of implant to use. The program is reported to use data provided entirely from a computed tomography scan. The press release notes that using the program allows surgeons to save time during surgery by adjusting their strategy beforehand. Since Genosys’s release in 2014, the company lists its use in 3800 pre-operative planning procedures, by over 1000 surgeons, in 21 countries .
The press release notes that the deal includes approximately $46.9 million in cash, $15.6 million in ordinary shares, and approximately $26.3 million, in potential earnouts and milestone payments for new software and implant systems.
In the press release, Robert Palmisano, President and Chief Executive Officer of Wright Medical Group, stated, “Software-enhanced solutions are the future, and with the acquisition of IMASCAP, we have the opportunity to take a significant lead in this area”.
In a statement by IMASCAP’s Jean Chaoui, President and Chief Executive Officer, “We believe that Wright, with its global leadership position in the extremities market and expertise in medical education and product development, is the ideal partner to realize the full potential of IMASCAP’s technology and product pipeline”.
In its press release, Wright Medical Group also expressed interest in a variety of other technologies under development that could potentially help the company expand into other joint replacement areas. Currently, the company has plans to offer the software free of cost to physicians currently using its shoulder joint replacement technology.
Gilead Sciences, Inc. recently announced an agreement to acquire Kite Pharma, Inc. for $11.9 billion. According to the announcement, Kite Pharma focuses on cell therapy treatment for cancer, which involves the genetic engineering and reintroduction of a patient’s own cells to better identify and combat cancers.
(Graphic from Kite Pharma website)
With the announcement, Gilead’s President and CEO stated that “cell therapy has advanced very quickly, to the point where the science and technology have opened a clear path toward a potential cure for patients[,]” and the acquisition “establishes Gilead as a leader in cellular therapy[.]” The announcement notes that Kite Pharma’s treatment for non-Hodgkin lymphoma is currently under review by the FDA, with a target action date of November 29, 2017.
Kite Pharma, Inc. is based in Santa Monica, CA and Gilead Sciences, Inc. has its U.S. headquarters in Foster City, CA.
Dutch conglomerate Philips recently announced that it will purchase Respiratory Technologies Inc. (RespirTech). According to its website, RespirTech describes itself as a St. Paul, Minnesota-based provider of inCourage vests, which help fight respiratory disease. According to a news release, the terms of the deal were not disclosed.
RespirTech’s website states that the inCourage vest uses high-frequency chest compression to help loosen and move mucus through the lungs. According to RespirTech’s website, the inCourage technology was developed by Pediatric Pulmonologist Warren Warwick, M.D., and Leland Hansen, MPH, in the early 1990’s to provide more effective secretion clearance for University of Minnesota cystic fibrosis patients.
According to Philips’ website, the conglomerate has primary divisions in the areas of healthcare, lighting, and home electronics. Philips’ 2016 annual report states that sales in its HealthTech portfolio increased 4% and topped $19 billion. In contrast, news sources state that RespirTech was founded in 2004 and reportedly had nearly $37 million in revenue in 2015.
With this transaction, we will broaden our portfolio with a proven therapy to enable patients with chronic respiratory disorders manage their condition and receive the care they need in the home.
According to Philips’ CEO, Franz van Houten, Philips has transformed itself over the last five years into a differentiated global health tech leader. Mr. van Houten stated that the markets Philips’ serve have attractive growth and attractive profitability. According to news sources, GE Healthcare, Siemens Healthineers, and Toshiba Medical Systems are other conglomerate divisions competing with Philips in the healthcare space.
As one analyst notes, the Twin Cities have produced a number of competing companies that make vests for treating lung conditions, including New Prauge-based ElectroMed Inc., and St. Paul-based Hill-Rom.
Becton Dickinson (“BD”) recently announced an agreement to acquire C.R. Bard for $24 billion in cash and stock. The transaction remains subject to regulatory and shareholder approvals, but is expected to close in the fall of 2017.
Both BD and Bard are century-old (BD was founded in 1897 and Bard was founded in 1907) medical device companies based in northern New Jersey. Bard offers devices for vascular medicine, urology, oncology and surgery, whereas BD provides syringes and infusion products, including those for diabetes management, and products for collecting and transporting diagnostic specimens. According to BD, Bard will expand BD’s focus on the treatment of disease states beyond diabetes to include peripheral vascular disease, urology, hernia and cancer.
The agreement to acquire Bard follows BD’s 2015 acquisition of San Diego-based CareFusion Corp. for $12 billion. The acquisition of CareFusion expanded BD’s product offerings to include devices used for administering and managing medication. Regarding its acquisition of Bard, Vincent Forlenza, Chairman and chief executive officer of BD states:
Combining with Bard will accelerate our ability to offer more comprehensive, clinically relevant solutions to customers and patients around the globe…We expect the transaction to contribute meaningfully to BD’s plans for revenue growth and margin expansion, and generate outstanding value both near- and long-term for shareholders.
Additionally, BD says the acquisition of Bard which registered approximately 500 products internationally in 2016 will accelerate the company’s growth in emerging markets outside of the U.S., including $1 billion in annual revenue in China. Tim Ring, Bard’s chairman and chief executive officer explains that: “our fast-growing portfolio in emerging markets can significantly benefit from their well-established international commercial infrastructure.”
Codman Neuro, part of Johnson & Johnson’s DePuy Synthes business unit, recently announced its acquisition of Neuravi Ltd., a privately-held Irish medical device company, for an undisclosed amount. The Irish Times reported that the acquisition is the largest price paid for a European venture-backed medtech company since Medtronic’s $700 million buyout of CoreValve in 2009. According to its website, Neuravi focuses on neurointervention therapies for acute stroke treatment.
Neuravi’s sale to Codman Neuro comes after several rounds of fundraising, in which Neuravi secured tens of millions of dollars for the development and commercializing of its EmboTrap Revascularization Device. Neuravi explains that the EmboTrap Revascularization Device is a thrombectomy system designed to restore blood flow to the brain by capturing and removing blood clots. In a 2016 press release, Neuravi CEO Eamon Brady quoted the most recent investment of $16.7 million as important for building a commercial presence in the U.S. and cited the “opportunity due to the under-developed stroke treatment ‘toolbox’ available to stroke clinicians today.” The EmboTrap devices are now commercially available in Europe and are currently undergoing clinical trials in the U.S. Speaking to the Irish Times regarding Neuravi’s acquisition, Justin Lynch, a partner of one of Neuravi’s early institutional investors, said:
This is a company that has knocked the ball out of the park. They have beaten every milestone, earlier and with less money that budgeted, which is almost unheard of in this business.
Neuravi’s revascularization devices appear to have successfully caught the attention of Codman Neuro. Shlomi Nachman, Company Group Chairman of Johnson & Johnson Medical Devices Cardiovascular & Specialty Solutions recently stated:
Rapid restoration of flow is of utmost importance when treating stroke patients . . . . The EmboTrap platform was designed to address this critical need and we are excited to combine Neuravi’s expertise in clot research with Codman Neuro’s global resources to accelerate innovation in acute ischemic stroke treatment.
Codman Neuro describes its portfolio as including medical devices for hydrocephalus management, neuro intensive care and cranial surgery, and endovascular treatment of cerebral aneurysms and stroke, including aneurysm coils and vascular reconstruction devices.
Shortly before Codman Neuro’s acquisition of Neuravi, Integra Lifesciences announced that it plans to purchase Codman from Johnson & Johnson for $1.05 billion. Integra explained that it intends the acquisition to expand Integra’s international presence. Integra markets products in orthopedic extremity surgery, neurosurgery, and reconstructive and general surgery, including wound repair. According to Integra’s press release, Codman Neuros’ neurosurgery business generated $370 million in 2016 from the sale of neuro-critical care and electrosurgery devices. Johnson & Johnson reported to Reuters that the deal with Integra excludes its neurovascular and drug delivery businesses.
Cosman Medical is a privately held manufacturer of radiofrequency ablation (RFA) systems used to treat patients with chronic pain, the leading cause of disability for adults in the United States. According to the press release, RFA has been used over the last 50 years as a procedure for providing relief for patients with chronic pain by applying heat to small areas of nerve tissue to interrupt pain signals.
According to Boston Scientific, the Cosman Medical team and products will become part of Boston Scientific’s Neuromodulation business, which currently offers Spinal Cord Stimulator (SCS) systems to treat patients with chronic pain. Spinal cord stimulation involves sending electrical signals to the spinal cord in order to mask pain signals from reaching the brain. Some patients find effective relief from RFA, whereas other patients turn to SCS to manage pain. Thus, the acquisition of Cosman Medical adds to Boston Scientific’s portfolio of non-opioid solutions for chronic pain.
Boston Scientific is headquartered in Marlborough, Massachusetts, and the company is a worldwide developer, manufacturer and marketer of medical devices. The company states that its products are used in a range of interventional medical specialties, including interventional radiology, interventional cardiology, peripheral interventions, neuromodulation, neurovascular intervention, electrophysiology, cardiac surgery, vascular surgery, endoscopy, oncology, urology and gynecology.
Lake Forest, Illinois-based RoundTable Healthcare Partners recently announced an agreement to acquire Symmetry Surgical, Inc. RoundTable states that the acquisition will provide a new platform in surgical instrumentation and specialty devices. According to the press release, RoundTable will acquire Symmetry for a total equity value of approximately $140.3 million. Thomas P. Kapfer, a Senior Operating Partner of RoundTable, will serve as Chairman of the Board of Symmetry. Regarding the acquisition, Mr. Kapfer stated that:
We are very excited to partner with Symmetry. The Company’s comprehensive product portfolio is comprised of well-known brands that are recognized by hospitals and physicians worldwide. We look forward to working with the management team as they continue to serve their customers and grow the business.
Symmetry is a Nashville, Tennessee-based marketer of reusable, reposable, and single-use surgical instrumentation and specialty devices. These devices include a comprehensive variety of surgical instruments, such as calipers, cannulas, curettes, needles, scalpels, specula, and tubes. The press release states that Symmetry’s portfolios include well-known brands such as BOOKWALTER®, GREENBURG®, OLSEN®, QUAD-LOCK®, RAPID CLEAN®, RILEY MEDICAL®, SHARP KERRISONTM, ULTRA INSTRUMENTS®, and VESOCLUDETM.
Craig Reynolds, the Chairman of Symmetry’s Board of Directors, stated that:
The sale of Symmetry to RoundTable will provide our shareholders with immediate and substantial cash value . . . and is in the best interest of all our stakeholders.
Nasdaq’s GlobNewswire describes RoundTable as a private equity firm focused exclusively on the healthcare industry. RoundTable partners with companies that can benefit from its industry relationships and operating expertise and has raised $2.75 billion in committed capital.
Stryker Corporation recently announced the purchase of United Kingdom-based Stanmore Implants from SIW Holdings Limited for £35.6 million (about $52 million USD) in an all-cash transaction. According to Stanmore’s website, it is a highly specialized organization, focusing on orthopaedic oncology and complex primary and revision cases in the upper limb, lower limb and pelvis. Stryker notes that Stanmore has a significant focus on serving the needs of the orthopaedic oncology market, including making custom implants for adults and juveniles suffering from cancer.
The acquisition of Stanmore Implants provides Stryker with differentiated technologies designed to provide the most effective solutions for orthopaedic oncology surgeons. This addition underscores Stryker’s commitment to our core joint replacement business and expands our presence in the global orthopaedic oncology market.
Stanmore’s online portfolio of products for adult patients includes modular implant solutions for the femur, tibia, knee, and humerus as well as oncology implants for the upper and lower limbs, and the pelvis. Stanmore’s portfolio also includes minimally-invasive prostheses for juvenile patients that can be adjusted, e.g., until the patient reaches full skeletal maturity, and what Stanmore calls its “non-invasive extendable implants” that are designed to be lengthened periodically by an external drive unit.
The purchase of Stanmore is the latest in a string of acquisitions for Stryker: in February, 2016, Stryker acquired Physio-Control International (in a $1.28 billion all-cash transaction); in February, 2016, Stryker agreed to acquire Synergetics’ neurology portfolio; in March, 2016 Stryker agreed to acquire Sage Products (in a $2.775 billion all-cash transaction); in April, 2016, Stryker acquired SafeWire’s minimally-invasive surgical portfolio; and in April, 2016, Stryker acquired CareFusion vertebral compression fracture (VCF) portfolio of products (in another all-cash transaction).
A burst of potential acquisitions and consolidations occurred on April 28th in the medical device world, the largest being Abbott Laboratories‘ deal to acquire St. Jude Medical Inc. The deal is for $25 billion dollars and would bring together two of the leaders in cardiac-related medical devices. It allows Abbott to boost its medical-device sector to compete with competitors Medtronic PLC and Boston Scientific Corp.
In particular, according to press releases, St. Jude has a strong portfolio in heart failure devices, atrial fibrillation, and cardiac rhythm management which will complement Abbott’s portfolio of cardiac intervention devices and transcatheter mitral repair. Certain medical devices produced by both companies can be used to alleviate the burden of cardiovascular disease, where more than 40% of adults are expected to experience some sort of cardiovascular disease by 2030.
“The combined business will have a powerful pipeline ready to deliver next-generation medical technologies and offer improved efficiencies for health care systems around the world.”
However, investors do not appears nearly as confident as Abbott’s stock fell by nearly 6 percent after the acquisition.
Abbott further has a pending deal to acquire the diagnostics company Alere Inc. for $5.8 billion. Other deals included Sanofi SA’s offer to purchase Medivation Inc. and AbbVie Inc.‘s offer to purchase Stemcentrx Inc. These consolidations appear to be attempts to improve negotiating power of the companies with hospitals.
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.
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.
In a recent press release, San Diego, California-based NuVasive, Inc. announced that it will acquire Ellipse Technologies, Inc. (“Ellipse”), a privately held medical technology company based in Aliso Viejo, California. According to its website, NuVasive is the third largest medical device company in the global spine industry and is dedicated to innovation and development focused on minimally disruptive surgical products and procedures for the spine. Ellipse describes itself as an innovative company dedicated to the design, development, and successful commercialization of non-invasively adjustable, remote controlled implants for a broad spectrum of spinal and orthopedic applications.
The press release states that the acquisition builds on NuVasive’s reputation as the leading technology provider for spine procedure solutions by adding a “highly regarded, disruptive technology platform.” Specifically, a Medical Device and Diagnostic Industry article reports that the acquisition strategically adds two of Ellipse’s main products to NuVasive’s product portfolio – MAGEC and PRECICE – products that will help boost NuVasive’s international footprint, since 37% of Ellipse’s 2015 revenue came from overseas. According to Ellipse, MAGEC (shown to the right) is a non-invasively adjustable growing rod used to brace the spine during growth to minimize the progression of scoliosis, and PRECICE is an adjustable intramedullary nail used for limb lengthening of the femur and tibia.
In connection with the acquisition, Gregory T. Lucier, Chairman and CEO of NuVasive, stated:
NuVasive remains committed to adult deformity through our Integrated Global Alignment (iGA™) platform, and the acquisition of Ellipse will aggressively insert NuVasive into early onset and idiopathic scoliosis, an important and attractive part of the spinal deformity market for NuVasive where we have tremendous opportunities for accelerated growth.
Joining forces with NuVasive not only validates the promise of our technology, but provides us with the scale and resources necessary to realize our full potential.
The press release notes that the Boards of Directors of both companies unanimously approved the terms of the acquisition, which include a $380 million upfront cash payment as well as a potential $30 million milestone payable in 2017. The transaction is expected to close by the end of February 2016, subject to customary closing conditions and regulatory approvals.