Stryker acquires K2M for $1.4B, a 27% premium: 5 things to know

Written by Laura Dyrda | August 30, 2018 | Print  |

Stryker inked a deal to acquire minimally invasive spine device company K2M for approximately $1.4 billion.

"This acquisition underscores our commitment to the spinal market, which is the largest segment of orthopedics with significant unmet needs," said Stryker Chairman and CEO Kevin Lobo. "We believe K2M will significantly enhance our presence with surgeons, patients and employees in both the spine and related neurotechnology markets."

Here are five things to know:

1. The $1.4 billion price tag is a 27 percent premium over K2M's average closing price during the past 90 days. Stryker will acquire the company and all issued and outstanding shares of common stock in a cash transaction totaling $27.50 per share. The transaction isn't expected to have an impact on the adjusted net earnings per diluted share for the full year.

2. After the transaction is complete, K2M Chairman, CEO and President Eric Major is expected to become president of the Stryker Spine division. K2M will be a wholly owned subsidiary of Stryker. The current president of Stryker's spine division, Bradley Paddock, is expected to assist with the transition and support integration efforts.

3. The transaction is expected to close late in the fourth quarter of 2018, pending the approval of K2M stockholders. The acquisition must also meet customary closing conditions and regulatory approval.

4. The board of directors for both companies have approved this transaction, which isn't subject to financing conditions. K2M has an average sales approaching $300 million, and it's portfolio will help Stryker grow in the $10 billion spine market. Over the past five years, K2M's portfolio and sales force have driven double-digit compounded annual growth rate.

5. Piper Jaffray & Co. was the acting financial advisor for the transaction and Simpson Thacher & Bartlett is the acting legal advisor to K2M. For Stryker, Citigroup Global Markets was the financial advisor and Skadden, Arps, Slate, Meagher & Flom was the outside legal counsel connected with this transaction.

"Joining Stryker will be a very exciting next chapter for our global team and surgeon customers around the world," said Mr. Major.

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