St. Jude Medical acquired NeuroTherm for $200 million in a transaction announced Monday.
St. Jude Medical is the latest company to join the consolidation craze in the orthopedic and spine device markets; some of the most recent transactions include Stryker's acquiring Small Bone Innovations and Smith & Nephew acquiring ArthroCare last month.
Here are five things to know about the transaction between St. Paul, Minn.-based St. Jude Medical's purchase of Wilmington, Mass.-based radiofrequency ablation systems manufacturer NeuroTherm:
1. St. Jude will pay around $200 million in cash for NeuroTherm, a privately-held company. Private equity firm Linsalata Capital Partners holds NeuroTherm in its portfolio.
"We are proud of the business that NeuroTherm has built and thank our employees and shareholders for their commitment to developing innovative interventional pain management therapies," said Christopher R. von Jako, president and CEO of NeuroTherm. "We see a promising future with St. Jude Medical that combines our products with a leading pain franchise and further develops the underpenetrated global market for chronic pain."
2. St. Jude will add around $10 million to $15 million to the company's sales as a result of the acquisition. The company projects this transaction will be neutral to consolidated earnings per share this year and then accretive on a GAAP basis. In their second quarter financial report, St. Jude Medical reported a 3 percent net sales increase and 6 percent adjusted net earnings per share increase. Net sales reached $1.4 billion in the first quarter.
3. The deal isn't expected to close until the third quarter of this year. The final transaction is dependent on customary closing conditions. The company expects revenue around $1.3 billion in the third quarter and full year revenue to reach $5.6 billion to $5.7 billion.
4. BofA Merrill Lynch is serving as financial advisor and Gibson, Dunn & Crutcher as legal counsel to St. Jude Medical. Piper Jaffray & Co., is acting as advisor and Calfee, Halter & Griswold is serving as legal counsel to NeuroTherm.
5. NeuroTherm acquired ArthroCare's interventional spine procedure lines for vertebroplasty and cavity creation in 2011. NeuroTherm's products are available in more than 65 countries.
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