Stryker Corporation (NYSE:SYK) will acquire Wright Medical Group NV (NASDAQ:WMGI) in a deal worth $5.4 billion. The equity is valued at $30.75 a share, which represents a premium of 52% over the VWAP of Wright’s stock price over the 30 days closing on October 31. As per the update, the boards of both firms have approved the deal, which is projected to close in 2H2020. This deal may not have any impact on adjusted EPS next year. Stryker reported that the deal would dilute EPS in 2021 by around 10% before getting accretive in the subsequent year.
Benefits from the deal
For Stryker, the acquisition is important because the product portfolio of two companies complement each other well. Wright’s product portfolio for the upper extremities would strengthen Stryker’s trauma, and extremities business is among the rapidly expanding segments in orthopedics.
Stryker has closed several acquisitions, including acquiring Mobius and its sister firm for up to $500 million in September. It has also agreed to spend up to $220 million on OrthoSpace in March. The agreement left Stryker with adequate room to make more “tuck-in” acquisitions if required.
Kevin Lobo, the CEO and Chairman of Stryker, said that this acquisition improves their international market position in trauma and extremities, offering considerable opportunities to enhance outcomes, advance innovation, and increase their customer base.
Robert Palmisano, the CEO and President of Wright, said that this transaction would create significant value for their employees, shareholders, and customers. By merging their collective resources and complementary strengths, they can advance their extensive platform of biologics and extremities technologies. Stryker is one of the world’s best medical technology firms that share their vision of offering innovative and breakthrough solutions to enhance patient outcomes. Palmisano added that this deal offers an opportunity for their employees to become part of one of the leading workplaces in the world.
Wright’s share price declined over 19% this year as of November 1, 2019. Stryker, meanwhile, surged more than 35% during the same period.