Stryker Acquires Joint Replacement System Maker
Stryker Corporation (SYK) revealed that it has entered a definitive agreement to acquire assets of Morrisville, PA-based privately held joint replacement system manufacturer Small Bone Innovations for $375 million. Following the announcement, shares of the company rose 0.4% to close at $84.32 yesterday.
Founded in 2004, Small Bone Innovations makes products designed for upper and lower extremity small bone indications. The company has facilities in France and Germany.
Small Bone Innovations’ Scandinavian Total Ankle Replacement or STAR Ankle system is sold in over 40 countries. STAR Ankle is the only PMA approved, cementless, and three-piece total ankle replacement system in the world.
Stryker will acquire assets that include STAR Ankle system. The addition of STAR Ankle system will boost Stryker’s existing Foot & Ankle portfolio.
Other assets that will be acquired by Stryker include finger, wrist, and elbow products, which will enhance the company’s upper extremity product portfolio. All the acquired assets had reported sales of $48 million in 2013.
Including the present value of tax benefits on account of the asset purchase, Stryker’s net cost of acquisition will amount up to $285 million. The acquisition is expected to wrap up in the third quarter of this year. Upon closing, it is expected to reduce Stryker’s earnings per share in 2014 by 2 cents, excluding acquisition, integration-related and intangible amortization charges.
Stryker continues to grow through acquisitions. In Dec last year, Stryker completed the acquisition of MAKO Surgical to get hold of the latter’s advanced robotic arm technology known as Robotic Arm Interactive Orthopedic System (RIO). The acquisition helped Stryker gain competitive edge in the hip-and-knee replacement market.
In March this year, Stryker completed acquisitions of Irvine, CA-based Patient Safety Technologies and Sunnyvale, CA-based developer of hip arthroscopy products, Pivot Medical, Inc.
Thereafter, in April, Stryker closed the Berchtold acquisition, which is expected to boost Stryker’s fast growing endoscopy division and operating room equipment product portfolio by adding complementary solutions.
Currently, Stryker carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical products industry that are worth a look include Owens & Minor Inc. (OMI), Symmetry Medical, Inc. (SMA), and Wright Medical Group Inc. (WMGI). All of them retain a Zacks Rank #2 (Buy).
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