Stryker Corp. (SYK) signed a definitive agreement to acquire
Orthovita Inc. (VITA), a maker of orthobiologic and biosurgery
products, for about $304 million in cash.
Shareholders will receive $3.85 for each share, a 41% premium
over Friday's close. The deal also includes $12 million in debt.
Shares surged premarket, matching the offer price and last traded
above it about a year ago. Stryker, meanwhile, was inactive and
closed Friday at $63.28.
Orthovita competes in the $5 billion orthobiologics market,
offering synthetic bone grafts through its Vitoss product and also
competes in vertebral augmentation with its Cortoss product.
Stryker's big business for replacement hips and knees has posted
flat sales recently as the orthopedics market struggles to overcome
a slowdown caused by economic turmoil and high unemployment.
"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," Chief Executive Stephen P. MacMillan said.
Stryker plans to launch an all-cash tender offer within 10
business days, which will be completed in the second quarter.
Orthovita has recommended shareholders accept the offer, and
those who hold about 14.5% of the company's shares outstanding have
already committed.
Stryker reported last month that its first-quarter earnings fell
4.4% on acquisition and integration-related charges, but the
company posted a double-digit sales increase behind continued
growth in its medical-supplies franchise and a newly acquired
business.
-By Lauren Pollock, Dow Jones Newswires; 212-416-2356;
lauren.pollock@dowjones.com