Stryker Acquires Small Bone Innovations for $375M: 5 Things to Know

Spinal Tech

Stryker acquired assets of Small Bone Innovations in a cash transaction of $375 million.

Small Bone Innovations is a privately-held business headquartered in Morrisville, Pa., and focused on upper and lower extremity small bone indications. Here are five things to know about the definitive agreement, announced today:


1. The net cost to Stryker after taking into account the present value of the tax benefits as a result of the asset purchase structure will be up to $285 million. There have been rumors Stryker may also be interested in acquiring orthopedic device company Smith & Nephew. Last week, Stryker's shares reached a 52- week high of $86.93, fueling further talk. Much of Stryker's recent growth has come through acquisitions, including the company's acquisition of MAKO Surgical last year and Patient Safety Technologies earlier this year.


2. Among the assets Stryker will acquire include SBi's Scandinavian Total Ankle Replacement System — the STAR Ankle — which is sold globally in more than 40 countries. It is the only PMA-approved, cementless, three-piece total ankle replacement system. Additional assets acquired include finger, wrist and elbow products.


During the first quarter of 2014, the company's trauma and extremities sales reached $288 million, up 8.4 percent over the same period last year. The trauma and extremities sales grew 9.4 percent in the United States.


3. After adding the STAR Ankle to Stryker's Foot & Ankle product portfolio, Stryker's portfolio will address a broad range of foot and ankle procedures. The company will also expand its upper extremity offerings with the acquisition. In 2013, sales of the acquired products reached $48 million.


4. Upon closing, the transaction is expected to be $0.02 dilutive to Stryker's 2014 earnings per share excluding acquisition, interrogation-related and intangible amortization charges. The transaction is expected to close in the third quarter of 2014 and is subject to the customary closing conditions.


5. Stryker stock prices opened at $84.99 on July 1 with a daily high of $85.89. For the rest of the year, Stryker expects organic revenue growth at 4.5 percent to 6 percent. The company expects an unfavorable foreign exchange rate to impact net sales by less than 1 percent, and feels the company's growth is key to success in the future. The spine business net sales reached $420 million, an increase over the same period last year. The growth was attributed to increased unit volume and changes in product mix, as well as the company's acquisitions.


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