Wright Medical Group Inc. (NASDAQ: WMGI) announced on Wednesday that it has entered into a definitive agreement with MicroPort Medical B.V. under which MicroPort Scientific Corp, (a subsidiary of MicroPort Medical) will buy Wright’s OrthoRecon business in deal valued at $290 million.
Shares rallied in early trade on Thursday climbing about 8%, at last check.
The Company said the acquisition value will depend on the net working capital adjustment, and will be payable in cash, when the deal closes. The deal is expected to close by the end of the third quarter or at the beginning of the fourth quarter of this year, subject to an approval from MicroPort shareholders and clearances from the regulatory authority.
Once the deal is closed, the MicroPort Orthopedic business will be overseen by Ted Davis, who at present serves as a President at Wright’s OrthoRecon. Arlington, Tennessee will continue to be the headquarters for OrthoRecon business.
It is estimated that after deducting taxes and transaction costs, Wright Medical will get about $260 million, which the company intends to use towards growth opportunities. Wright Medical said that $25 million to $35 million from these proceeds will be used towards business transition efforts while the remainder will used to fund its Extremities and Biologics business, which are high growth business, and reduce certain existing liabilities of the OrthoRecon business.
In 2012, Wright Medical Group’s Extremities segment, which provides solutions for foot, ankle, upper extremity, generated about $214 million in revenue, globally.
Commenting over the deal, Wright Medical’s President and Chief Executive Officer, Robert Palmisano said, “Over the last 18 months, we have made significant progress in transforming our business to dramatically accelerate growth in our 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.”
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