Smith & Nephew, the global medical technology business, have announced the execution of a definitive agreement to acquire medical device company ArthroCare Corp for $48.25 per ArthroCare share in cash, a total consideration of approximately $1.7 billion and an enterprise value of $1.5 billion.
Commenting, Olivier Bohuon, Chief Executive Officer of Smith & Nephew, said: “This is a compelling opportunity to add ArthroCare’s technology and highly complementary products to further strengthen our sports medicine business. Together, we will be able to generate significant additional revenue from the more comprehensive portfolio, combined sales force and Smith & Nephew’s global footprint. With this transaction, we are again accelerating our strategy to rebalance Smith & Nephew towards higher growth.”
The purchase price represents a 20% premium over the 90-day volume weighted average price of ArthroCare’s shares prior to this announcement. It represents a multiple of 15.7 times EV/adjusted 2012 EBITDA.
The acquisition will be subject to customary conditions, including a vote of ArthroCare’s shareholders and governmental clearances. Pending the satisfaction of such customary conditions, Smith & Nephew anticipates closing the transaction in mid-2014. ArthroCare will be integrated swiftly to minimise disruption to customers.
David Fitzgerald, President and Chief Executive Officer of ArthroCare, commenting on the transaction said: “ArthroCare and Smith & Nephew know each other well from our licensing and supply arrangements, and this is a natural transaction for both companies. The Board believes that this transaction is in the best interest of our shareholders.”
Europe’s largest maker of artificial hips and knees celebrated more good news by posting an 8% rise in fourth-quarter underlying trading profit, beating market expectations, as demand for its orthopaedic reconstruction products improved.
The company posted trading profit of $292 million on revenue of $1.18 billion, up 6% on an underlying basis, resulting in adjusted earnings per share of 23.4 cents.
Mr Bohuon said Smith & Nephew finished the year strongly: “Our Orthopaedic Reconstruction business confirmed its improved dynamic, in particular delivering 11% growth in US knees.”
For 2014, he said orthopaedic reconstruction would continue its recent improved performance, and he expected it to grow at approaching the market rate.