MicroPort Medical, a subsidiary of China-based MicroPort Scientific, has signed a definitive agreement with Wright Medical, a US-based orthopaedic company, to purchase Wright's OrthoRecon business for $290m in cash.
The acquisition is expected to close by the end of the third quarter or early in the fourth quarter of 2013 following the approval of MicroPort shareholders and regulatory authorities.
The deal will help MicroPort to tap the growing hip and knee implant market; the global market was worth $14bn in 2012, while the Chinese market is expected to be worth $1.3bn by 2018 and is currently growing by approximately 17% every year.
Wright's OrthoRecon business manufactures hip and knee implant products under brands such as Dynasty, Conserve, Profemur, Superpath, Advance and Evolution.
In 2012, the division generated global revenues of around $269m.
Wright Medical president and CEO Robert Palmisano said that over the past 18 months the company has made significant progress in transforming its business to accelerate growth in its 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.
"In addition, as a smaller, high-growth extremities company with breakthrough biologic opportunities, we will now be able to devote our full resources and attention on accelerating growth opportunities in this area, including improving sales productivity, extending the global reach and penetration of our products in key international markets, and seeking to gain US regulatory approval for Augment® Bone Graft," Palmisano added.
In 2012, Wright's extremities segment, which comprises foot and ankle, biologics and upper extremity, posted global revenues of $214m.
Upon closure of the deal, Wright Medical intends to speed up growth in its foot and ankle business and boost sales productivity to $1m per rep in the US in 2014.
Wright Medical estimates net proceeds, after the tax including transaction costs, to be approximately $260m.
The US firm plans to use a part of the proceeds to fund transition costs of anywhere between $25m and $35m, while the remaining amount will used to boost its extremities and biologics business and pay some liabilities of the OrthoRecon business.
Following the completion of the transaction, OrthoRecon will retain its headquarters in Arlington, Tennessee, while its current president Ted Davis will head the MicroPort Orthopaedic business division.