Stryker Snaps Up Memometal - Analyst Blog
June 07 2011 - 12:38PM
Zacks
Orthopedic devices major Stryker Corp (SYK) has
agreed to buy France-based privately-held extremity devices maker
Memometal Technologies S.A. for $150 million in cash. The deal also
involves an additional payment of $12 million contingent upon
meeting specific milestones.
Memometal makes products for extremity indications with annual
sales of roughly $30 million. The entity is strengthening its
foothold in the rapidly growing global extremity devices market
with a broad range of foot, ankle, hand and wrist implant
products.
The acquisition will broaden Stryker’s exposure in the
extremities market and reinforce its position as a major player in
the fast-growing foot and hand segments of this market. The
transaction, which is subject to customary closing conditions, is
expected to consummate in third-quarter 2011. Upon fruition, the
deal is expected to be neutral to the company’s adjusted earnings
per share for 2011.
Stryker, which has annual sales of $7.3 billion, is on an acquisition
binge to incite growth as it faces
sustained pricing and procedure volume pressure in its core
replacement hips and knees businesses. The company is expanding its
product portfolio by acquiring complementary businesses leveraging
a solid balance sheet.
The Michigan-based devices maker struck a deal in May 2011 to
buy Pennsylvania-based orthobiologic and biosurgery products maker
Orthovita (VITA) for $316 million in cash. Per the
agreement, shareholders of Orthovita will receive $3.85
for every
share they hold. Stryker recently launched a tender offer
for the acquisition, which is slated to expire at midnight June
24.
Earlier, the company bought Boston Scientific’s
(BSX) Neurovascular assets in January 2011 for $1.5 billion,
providing it a
presence in the fast-growing therapy markets. Moreover,
Stryker acquired privately-held medical products maker Gaymar
Industries which boosted its acute-care product offerings.
We believe that Stryker is well placed for growth driven by new
product launches, acquisitions and an improving hospital capital
spending backdrop. However, the company remains exposed to stiff
competition and pricing/volume pressure on its hip, knee and spine
products. Our long-term Neutral recommendation on Stryker is
supported by a short-term Zacks #3 Rank (Hold).
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