Medical Device Daily
Zimmer Holdings (Warsaw, Indiana) said it has agreed to acquire Abbott Spine (Austin, Texas) from Abbott Laboratories (Abbott Park, Illinois) for roughly $360 million in cash.
Zimmer said it plans to pay for Abbott Spine with cash on hand and borrowings under existing credit facilities. The deal is expected to close in the fourth quarter. Abbott's 12-year-old spine business raked in revenues of $109 million last year, while Zimmer Spine's (Minneapolis) revenues for the same period were $197 million, the company noted. The boards of both companies have approved the deal, and stockholder approval is not required, Zimmer said.
"This acquisition is another significant step in executing our strategies to position Zimmer for sustained growth in the future. We are excited to be adding a number of innovative products that round out the Zimmer Spine portfolio and help us build toward critical mass in this important business segment," said David Dvorak, president/CEO of Zimmer. "In addition to bringing great products and a promising pipeline, the Abbott Spine acquisition will add to our research and development capabilities in the spinal category and will strengthen our sales coverage."
In addition to Abbott Spine's headquarters in Austin, the business has an international facility in Bordeaux, France. Throughout its history, Abbott Spine has developed a series of technologies and techniques to treat spine disease. Among its key products are the InCompass pedicle screw system; the Pathfinder minimally invasive pedicle screw system; the Wallis Interspinous Stabilizer system (available outside the U.S.); the Ant-Cer Dynamic cervical plate; and the Universal Clamp.
Zimmer Spine intends to maintain a presence at Abbott Spine's Austin and Bordeaux sites. Abbott Spine has about 300 employees worldwide. "We have great respect for the talent and passion of the Abbott Spine organization. Combining our businesses will enable us to provide better product choice and improved customer service to spine and neuro surgeons as they seek the best solutions for their patients. We look forward to welcoming the Abbott Spine organization and their customers into the Zimmer family," Dvorak said.
Zimmer expects the transaction to be about 3 cents dilutive to adjusted diluted earnings per share in the fourth quarter of 2008, between 8 cents and 10 cents dilutive in 2009 and neutral to slightly dilutive in 2010. These estimates exclude one-time charges related to the purchase price allocation for acquired inventory, restructuring and integration charges, as well as any in-process R&D charge incurred in connection with the transaction. The definitive purchase price allocation will be completed after the close of the transaction; however, Zimmer expects to record an in-process R&D charge of about $50 million in the fourth quarter and to step up the value of acquired inventory by roughly $25 million. Zimmer also expects to incur $40 to $50 million in restructuring and integration costs in connection with the transaction, primarily related to the integration of the separate global sales networks, the company said.
Zimmer, a company best known for its orthopedic devices, said it would provide additional details about the deal during its third quarter 2008 investor conference call, which is scheduled for Oct. 23.
In other dealmaking activity:
• Phase Forward (Waltham, Massachusetts), a provider of data management solutions for clinical trials and drug safety, said it has acquired Clarix (Radnor, Pennsylvania), a provider of fully web-integrated interactive response technology (IRT), for $40 million in cash. Clarix will continue to operate from its existing offices as part of Phase Forward.
Clarix's IRT is used for subject randomization, predictive medication inventory management, and operational management and reporting in clinical trials. Thomas Weisel Partners acted as exclusive financial advisor to Phase Forward in the deal.
• Wright Medical Group (Arlington, Tennessee), a global orthopedic device company, said it has acquired the Rayhack system for complex wrist reconstruction. Financial terms were not disclosed.
The Rayhack system consists of procedure-specific bone-cutting guides and fixation plates that allow precise shortening and repositioning of the radius and ulna, the two major bones of the forearm. These surgical procedures are offered to patients suffering from wrist arthritis secondary to trauma or Kienbock's disease, an avascular condition of the bones of the wrist. The system complements Wright's portfolio of orthopaedic products for surgery of the hand, wrist and elbow, the company said. This portfolio includes the Micronail intramedullary wrist fracture system and the Evolve radial head implant and Swanson finger implants.
Wright said the Rayhack system would be made available in the U.S. immediately, with international availability early next year. The company estimates there will be more than 20,000 applicable procedures for the system domestically, and more than 40,000 worldwide.
• Wolters Kluwer Health (Conshohocken, Pennsylvania), a provider of information and business intelligence for students, professionals and institutions in medicine, nursing, allied health, pharmacy and the pharmaceutical industry, said it intends to acquire UpToDate (Waltham, Massachusetts), an electronic clinical information resource. Financial terms were not disclosed.