Michigan-based medical technology firm Stryker announced this week that it will be acquiring medical device maker Wright Medical Group in a $4 billion cash deal. In announcing the purchase, Stryker asserted that Wright’s experience with devices for the upper extremities would serve as a complement to Stryker’s existing product line.
“This acquisition enhances our global market position in trauma and extremities, providing significant opportunities to advance innovation, improve outcomes and reach more patients. Wright Medical has built a successful business, and we look forward to welcoming their team to Stryker,” said Stryker chairman and CEO Kevin Lobo in a statement.
Under the deal terms, Stryker agreed to pay $30.75 per share for Wright, which closed at $22.01 on Friday. The deal implies a $5.4 billion enterprise value for Wright including debt.
In the company’s own statement publicizing the deal, Wright pointed out that the cash offer from Stryker represents a 52 percent premium to Wright’s volume-weight average closing price for the past 30 days.
Said Wright CEO Robert Palmisano, “we believe this transaction will provide truly unique opportunities and will create significant value for our shareholders, customers and employees…by merging our complementary strengths and collective resources, we will be able to advance our broad platform of extremities and biologics technologies with one of the world’s leading medical technology companies.”
Rumors of the deal began circulating late last week, with Bloomberg reporting after markets closed on Friday that Wright was considering a sale. However, some analysts did not expect that Stryker would be the purchaser; before the deal was announced on Monday morning, Needham analyst Mike Matson ruled out Stryker as an interested party due to the “potential antitrust issues” that could be raised, as both companies provide foot and ankle products.
Following the announcement of the acquisition, Wright’s share price jumped almost 30 percent to $28.53 on Monday morning; in contrast, Stryker’s shares dropped four percent in early morning trading.
The companies expect the deal to close in the second half of next year, following a likely review by the Federal Trade Commission and a vote by Wright shareholders.
