Wright Medical Buys French Extremities Company
Wright Medical Group, Inc. has finalized a deal to purchase Biotech International, a privately held French orthopedic extremities company. Biotech makes implants and instruments for foot, hand and trauma surgery, as well as a line of implantable bone substitute.
According to Wright, the acquisition will expand its direct sales channel in France and international distribution network and add Biotech’s complementary extremity product portfolio to speed growth opportunities in Wright’s global extremities business.
Under the terms of the agreement, Wright will pay $75 million payable at closing, comprising approximately $55 million in cash and $20 million of Wright common stock. The deal also calls for an additional $5 million in cash contingent upon the achievement of certain revenue milestones in 2014 and 2015.
The transaction is expected to close by the end of the year. As part of the transaction, Biotech will spin off its dental business before the close.
“The acquisition of Biotech International is an excellent fit for our Extremities business, enabling us to immediately expand our direct foot and ankle presence in Europe and add a base of extremity revenue that we can effectively grow on a go-forward basis,” said Robert Palmisano, president and CEO of Wright. “In addition, Biotech’s products complement our existing foot and ankle portfolio and include several specialized products that expand our extremities product offering. We plan to utilize Biotech’s strong direct sales channel in France and established distributor presence in emerging markets to extend the reach of our international distribution network and further accelerate growth opportunities in our global Extremities business.”
Biotech International had extremity revenues in the $15 million range for fiscal year ended June 30 this year—generated primarily in France and other international countries, and minimal revenue in the United States.
Analysts view the move as a positive one.
According to Richard Newitter, analyst for Leerink Swann, his group views the acquisition "as an overall positive move" that should enhance Wright's direct distribution presence in the European Union, and is consistent with the company's strategy of pursuing mergers and acquisitions to accelerate growth as an "extremities pure-play—i.e., replenishing recently divested orthopedic reconstruction assets with faster-growing extremities products/distribution capabilities."
In June, Wright sold its large-joint reconstruction business to China-based MicroPort Medical BV for $290 million in cash.
Wright’s OrthoRecon business consists of hip and knee implant products.
Arlington, Tenn.-based Wright Medical Group focuses on surgical solutions for the foot and ankle market.