Medical device giant Stryker is strengthening its presence in trauma and extremities surgeries with a cash deal to acquire Wright Medical for $4 billion.
According to deal terms announced Monday, Kalamazoo, MI-based Stryker (NYSE: SYK) will pay $30.75 per share, a nearly 40 percent premium compared to the Friday closing stock price of Wright Medical (NASDAQ: WMGI). Shares of Wright Medical leaped more than 32 percent on the news. Meanwhile, Stryker’s share price slipped 3.8 percent to $204.63 apiece.
Stryker says Wright Medical will complement its trauma and extremities business, a big piece of its orthopedics segment. The Michigan company separates its operations into three business segments: orthopedics, medsurg (surgical equipment and navigation systems), and neurotechnology and spine. The orthopedics segment, which includes implants used in hip and knee replacements, as well those used in trauma and extremities surgeries, generated $4.9 billion in 2018 sales, according to Stryker’s annual report. Trauma and extremities products accounted for nearly $1.6 billion of those sales.
Wright Medical, which is based in Amsterdam and maintains US headquarters in Memphis, TN, specializes in products used in extremities surgeries. The company also has a portfolio of biologic products, which are used to regenerate or repair bones and soft tissue to minimize or delay the need for invasive implant surgery. Wright Medical reported $836 million in sales in 2018.
Stryker notes that Wright Medical is particularly strong in selling products used in both the upper extremities (the shoulder, elbow, wrist, and hand) as well as the lower extremities (foot and ankle).
The boards of directors of both Stryker and Wright Medical have approved the acquisition. The deal still needs approval from regulators and from Wright Medical shareholders. The companies expect to complete the transaction in the second half of 2020.
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