Stryker to acquire Orthovita


On May 16, Stryker announced a definitive agreement to acquire Orthovital in an all cash tender offer. Orthovita competes in the US$5 billion orthobiologics market and is a global leader in synthetic bone grafts with its Vitoss product offering, and also competes in vertebral augmentation with its Cortoss product offering.

In addition, the company’s biosurgery business manufactures haemostasis products such as Vitagel which are designed to control intra-operative and post-operative bleeding. Combined, Orthovita’s product portfolio achieved sales of US$95 million in 2010. The acquisition of Orthovita is highly complementary to Stryker’s existing orthobiologics offering, which is currently sold through multiple Stryker divisions.

Under the terms of the agreement, Orthovita shareholders will receive $3.85 for each outstanding Orthovita share of common stock. The value of the transaction is estimated at $316 million, based upon Orthovita’s 79 million fully diluted shares outstanding as well as net debt of $12 million. 
“With this acquisition we are meaningfully expanding our orthobiologics product portfolio and strengthening our competitive position in key segments of the Spine, Orthopaedics and Biosurgery markets,” said Stephen P MacMillan, chairman, president and CEO of Stryker.

The boards of directors at Stryker and Orthovita have approved the transaction, and the board of directors of Orthovita resolved to recommend that Orthovita shareholders tender their shares to Stryker in the tender offer.  In addition, shareholders holding approximately 14.5% of the outstanding shares of Orthovita common stock have entered into agreements with Stryker to support the transaction and to tender their shares in the offer.

The tender offer is scheduled to commence within 10 business days and is expected to close in the second quarter of 2011.  The tender offer is subject to customary closing conditions, including the tender of a majority of the outstanding shares of Orthovita common stock on a fully diluted basis and the expiration or termination of the Hart-Scott-Rodino Antitrust Improvements Act waiting period. Following the tender offer, Stryker will acquire the remaining outstanding shares of Orthovita common stock through a second step merger.  Upon closing, the transaction is expected to be neutral to Stryker’s 2011 earnings per share excluding acquisition and integration-related charges.