Water Street to Acquire Orthofix’s Sports Medicine Business

Orthofix International N.V. and Breg Inc. are parting ways.

The orthopedic device manufacturer is selling Breg, its sports medicine business unit, for $157.5 million in cash to Chicago, Ill.-based private equity firm Water Street Healthcare Partners LLC. Executives expect the sale to be completed in the second fiscal quarter of 2012.

Orthofix will use the $140 million in net proceeds from the sale to pay off debt.

Orthofix, headquartered in Curacao, Netherlands Antilles, acquired California-based Breg in 2003. Breg features a portfolio of bracing and cold therapy products that treat various sports-related conditions.

In an April 24 conference call, Orthofix CEO and President Robert Vaters discussed the reason the company decided to sell Breg. “It allows us to execute on our strategic focus to develop and deliver innovative repair and regenerative solutions to the spine and orthopedic markets,” he said. “Specifically, our deleveraging gives us more capacity to invest in the repair and regeneration value proposition and at the same time to deliver gross and operating margin improvement—all this while decreasing volatility of earnings from ongoing operations.”

In a press release, Water Street partner Chris Sweeney said his company would “leverage [its] team’s deep medical products knowledge, extensive operating experience and network of relationships to strategically expand Breg’s innovative products and global presence.”
Upon the sale’s closing, Orthofix will file the required documents with the Securities and Exchange Commission, including any impact of pre-closing liabilities the company will retain.

Founded in 1980, Orthofix develops trauma and spinal fusion products. Its North American headquarters is located in Lewisville, Texas.

Water Street invests in healthcare companies focused in medical and diagnostic products, specialty distribution, outsourced healthcare services, and specialty pharmaceutical products and services.