MicroPort Medical, a subsidiary of MicroPort Scientific, has signed a definitive agreement with Wright Medical Group, a US-based orthopaedic company, to acquire Wright's OrthoRecon business for $290m in cash.
The transaction is subject to customary closing conditions, including MicroPort shareholder approval and receipt of regulatory clearances. It is expected to close by the end of the third quarter or early in the fourth quarter in 2013.
Wright’s OrthoRecon business consists of hip and knee implant products such as Dynasty, Conserve hips, Profemur modular stems, Superpath minimally invasive hip surgical instrumentation, and Advance and Evolution medial-pivot knee implants.
Following the divestiture, Wright Medical expects to accelerate growth in its foot and ankle business and increase US foot and ankle sales productivity to $1m per rep in 2014.
Wright Medical expects the net proceeds after the tax, including transaction costs, to be approximately $260m. The firm expects to use the net proceeds to fund transition costs anywhere between $25m and $35 million and the remaining amount to fund growth opportunities for its Extremities and Biologics business and pay certain liabilities of the OrthoRecon business.
Wright Medical president and CEO Robert Palmisano said that over the last 18 months, the company has made progress in transforming its business to dramatically accelerate growth in its foot and ankle business, build a growing, global OrthoRecon business, and significantly improve cash flow.
"This next step in our transformation should enable both businesses to flourish as separate, global companies focused in their unique market space with strong management teams that will position them for continued success.
"In addition, as a smaller, high-growth Extremities company with breakthrough biologic opportunities, we will now be able to devote our full resources and attention on accelerating growth opportunities in this area, including improving sales productivity, extending the global reach and penetration of our products in key international markets, and seeking to gain U.S. regulatory approval for Augment® Bone Graft," Palmisano added.
Upon the completion of the deal, OrthoRecon business will retain its headquarters in Arlington, Tennessee and Ted Davis, who is currently president of Wright’s OrthoRecon business, will lead the MicroPort Orthopedic business.