Industry News

Orthofix Shareholders Reject Alternative Board Members

Shareholders of Orthofix International N.V. rejected a slate of alternative board members proposed by dissident shareholder Ramius LLC.

The Netherlands-based Orthofix did not provide a vote tally or many details of the special shareholders meeting on April 2. A news release posted on its Web site said shareholders “voted resoundingly” in favor of the current board members, thus rejecting Ramius’ proposals and its slate of board candidates. Ramius, a global investment management firm based in New York, N.Y., owns a 5 percent stake in Orthofix, which bases its U.S. operations in Boston, Mass.

“The board of directors and management team of Orthofix are thankful that shareholders chose to reject the short-term focus of the Ramius proposals, instead voting to support the company’s long-term strategic plan to deliver shareholder value,” said Alan Milinazzo, Orthofix CEO. “We have made significant progress in recent months, achieving critical milestones and improving operational effectiveness. We are committed to continuing to execute the board’s strategic plan to deliver results for the benefit of all shareholders in the weeks and months to come.”

The showdown between Ramius executives and Orthofix board members had been brewing for months. Each side accused the other of mismanagement—Ramius executives said Orthofix board members “failed time and time again” to stop the company’s stock from eroding, while Orthofix executives argued that Ramius appear-ed unable to manage its own affairs. In the weeks leading up to the special meeting, Orthofix board members bombarded shareholders with letters urging them to oppose the four candidates Ramius had nominated for the 10-member board.

The accusations continued more or less to the very end. Three days before the vote, Ramius retracted a false statement it made about Orthofix Chairman James F. Gero. In a presentation to RiskMetrics Group, a global financial risk management firm, Ramius stated that Gero is “chairman of Clearwire Inc., [whose] stock price has declined 88 percent since the initial public offering.” Orthofix executives said the statement linking Gero to the decline in value of Clearwire’s stock disparaged his professional reputation and misled shareholders about his background.

In a March 30 filing with the Securities and Exchange Commission, Ramius retracted its statement about Gero, saying “While James Gero was not chairman or a board member of Clearwire Inc. at the time of its IPO in 2007 or since then, he has been a director of Orthofix since 1998 and has served as chairman since 2004.”

Ramius first proposed replacing four Orthofix board members, including the company’s chairman and deputy chairman, late last year. In a Dec. 3 letter to Orthofix shareholders, Ramius executives outlined a plan to “substantially increase shareholder value” and protect investors’ interests. That plan involved selling Blackstone Medical, an Orthofix subsidiary that makes spinal implants and other instruments.

“In our opinion, the acquisition [of Blackstone Medical] was a failure from the outset,” Jeffrey C. Smith, a Ramius partner, and Peter A. Feld, Ramius’ managing director, stated in an 11-page letter to Orthofix shareholders. “We believe management and the board of directors failed to address critical risk factors during due diligence, failed to implement and executive a viable operating plan…The acquisition saddled Orthofix with a heavy debt load, which has now put the company in a precarious position.”

Smith and Feld proposed selling Blackstone “at the highest possible price” to improve Orthofix’s consolidated earnings and free cash flow.

The move, they said, would enable the company to begin reducing heavy debt load.

Board members, however, claimed that Ramius’ proposal to sell Blackstone Medical would disrupt the progress managers at Orthofix and Blackstone have made in executing the company’s strategic plan, which includes the accelerated launch of an adult stem cell-based allograft and the limited market release of two new spinal repair products.

At least two industry analysts sided with Orthofix board members. They said selling Blackstone Medical would jeopardize the company’s long-term growth efforts and would provide only a short-term increase in shareholder value.

FLA Orthopedics Moving 163 Jobs to Mexico

The German parent company of FLA Orthopedics is closing a manufacturing plant in South Florida and moving all 163 jobs to Mexico.

Layoffs began May 29 and will occur in four phases through Sept. 30, according to a notice filed with Florida state officials by BSN Medical, a Hamburg, Germany-based firm that purchased FLA Orthopedics in Nov-ember 2007.

All manufacturing operations are expected to be transferred to Reynosa, Mexico, a city of 507,998 on the Texas border, by Oct. 1.

FLA Orthopedics workers being laid off will have the chance to apply for other jobs at BSN, company executives said.

The layoffs at FLA Orthopedics are part of a cost-cutting initiative by BSN that includes the consolidation of its manufacturing facilities in Miramar, Fla., and Huntsville, N.C. Poag told the South Florida Business Journal that BSN employs 30 people in Huntsville.

FLA Orthopedics, based in Mir-amar, designs and manufactures orthopedic, sports medicine and spinal bracing products.

Avalign Technologies Buys NGInstruments Inc.

Avalign Technologies Inc. is one step closer to becoming a single-source supplier. The Lake Forest, Ill.-based company, backed by private equity firm Roundtable Healthcare Partners, has acquired NGInstruments Inc., a manufacturer of medical drills and precision instruments. Terms of the deal were not disclosed.

Forrest Whittaker, Avalign CEO, said the acquisition will expand his company’s product portfolio and enable the firm to provide more services to customers.

“This combination is positive for the customers and employees of both companies, as we continue to expand our product portfolio, manufacturing capabilities and scale, Whittaker said in a press release posted on Avalign’s Web site. “We look forward to working together with NGInstruments’ management team to expand our service to customers and to realize our growth objectives.”

Tony Nicholas, co-founder and president of NGInstruments, said the merger also would help his company to grow.

“Avalign and RoundTable are ideal partners for NGInstruments,” Nicholas said in the release.

“The combination of the businesses will create a stronger organization with deep, broad-based customer relationships, providing best-in-class service. The partnership with Avalign and RoundTable will also help us grow by providing access to new customers and markets, and the resources to support our growth initiatives,” he added.

Joseph F. Damico, a founding partner of RoundTable (Avalign’s parent company), called the merger “a strategic” one for Avalign because it will help differentiate the company as a full-service supplier to medical device OEMs.

“NGInstruments adds an important product line through their expertise in precision grinding that bolsters Avalign’s offering to its orthopedics customers in the reconstruction, trauma, sports medicine, and spine markets,” noted Damico, who also serves as Avalign’s board chairman. The merger will not affect NGInstruments’ 78 employees.

The purchase brings Avalign’s work force total to 430 employees.

Oliver Medical, TOLAS Healthcare Join Forces

Oliver Medical, a supplier of die-cut, roll stock, and pouch products to the medical device and pharmaceutical markets, has acquired TOLAS Health-care Packaging. The two companies now operate under a new moniker, Oliver-Tolas Healthcare Packaging.

Integration of the two companies began in the first quarter of the year, according to a news release announcing the acquisition.

“Combining our individual company names reflects the consolidation of our extensive resources, technology and experience, while also acknowledging the individual histories and strengths each company brings to the organization,” said Jerry Bennish, Oliver-Tolas Healthcare’s CEO and president.

The merger did not affect manufacturing and administrative activities at any Oliver-Tolas Healthcare Packag-ing’s facilities, officials said.

Oliver Medical is based in Grand Rapids, Mich. It has manufacturing facilities in Grand Rapids (which is ISO 13485 certified) and Venray, the Netherlands, and a sales office in Suzhou, China.

Tolas Healthcare Packaging manufactures sterile-grade packaging, in-cluding peelable or tear-open pouches and heat-seal coated lidding. The company operates manufacturing facilities in Philadelphia, Penn., and Cincinnati, Ohio. Oliver Medical was acquired in June 2007 by Mason Wells, a private equity firm based in Milwaukee, Wis.

•••

ISO Certifications:

• Tegra Medical, a manufacturer of wire and tubular products for the medical device and life sciences industries, has been awarded ISO 13485:2003 and ISO 9001:2000 certification for the quality management system at its Franklin, Mass., facility. The company was certified to both standards at its Holliston, Mass., facility, but was forced to become recertified after it transferred operations in Holliston and Cranston, R.I., to the Franklin plant.

•••

Millstone Medical Celebrates Opening of New Mass. Facility

Millstone Medical Outsourcing has expanded its operations in Fall River, Mass. The company in April opened a new 30,000-square-foot facility that includes an advanced mechanical inspection area, a 5,000-square-foot state-of-the-art clean room and significant floor space for packaging operations.

“We are excited to add to our Fall River operations to meet customer demand for advanced inspection and clean room services,” said Christopher Ramsden, Millstone Medical CEO. “The new facility is specifically designed to enable Millstone to scale with medical device manufacturers and solve specialized inspection, packaging, and distribution challenges. The new facility’s inspection cell features state-of-the-art equipment, including optical comparators, coordinate measuring machines, vision systems, and microphites.”

The clean room incorporates ultrasonic clean lines within environmentally controlled areas. And the entire facility can be monitored remotely for particulate and environmental conditions.

The company, which provides outsourcing services to the medical and dental device industries, held a ribbon-cutting ceremony and open house at the new facility on April 24. Fall River Mayor Robert Correia and U.S. Rep. Barney Frank (D-Mass.) attended the event.