By Saumya Joseph
(Reuters) – Medical device maker Stryker Corp
Wright Medical, which recorded sales of $836 million last year, is among the top makers of implants to treat upper-body joint injuries such as in shoulder or wrist, as well as lower body including in foot and ankle.
Wells Fargo analyst Larry Biegelsen said the deal would give Stryker a leading position in the shoulder market, which has been a major gap in the device maker’s orthopedic portfolio.
“Stryker will meaningfully bolster its ability to compete and innovate in the nearly $2 billion global shoulder market,” Chief Executive Officer Kevin Lobo said in a conference call with analysts.
Stryker, however, may have to make some divestments in its ankle implant portfolio to avoid antitrust issues as Wright Medical has a near 70% share of the total ankle replacement market, analyst Biegelsen said.
The company said it was too early to tell if any divestitures would be required for the deal to go through.
The deal marks the latest effort at consolidation in the medical device industry after Boston Scientific Corp’s Stryker will also gain access to Wright Medical’s biologics portfolio including its Augment drug-and-device combination product used for bone repair, and its Cartiva implant for foot and ankle. Stryker’s offer for $30.75 per Wright share represents a premium of 39.7% to the company’s close on Friday. Wright Medical shares were trading at $28.85 before the bell, while Stryker’s shares fell 3.65%. Including debt, the deal values Wright at about $5.4 billion and is expected to close in the second half of 2020.
Stryker said it will continue to look for opportunities to expand its reach in the orthopedics market and that it still has the capacity for small acquisitions.
Bloomberg reported on Friday that Wright Medical was exploring a potential sale.
(Reporting by Tamara Mathias and Saumya Sibi Joseph in Bengaluru; Editing by Shinjini Ganguli)
