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Wright Medical and Tornier Announce Intent to Merge

Article Updated: July 22, 2015

Wright Medical and Tornier announced a merger agreement expected to expand the combined company’s product breadth and global reach. Once the $3.3 billion transaction is complete, Wright is expected to secure one of the top spots in the global extremities segment along with Zimmer Biomet and DePuy Synthes.

The new Wright Medical pure-play extremities/biologics business will strive to:

  • Offer surgeons and hospitals a comprehensive collection of upper and lower extremity products, with a global presence
  • Capitalize on opportunities in rapid-growth segments of upper extremities, lower extremities and biologics, including sales of biologics across the entire product portfolio, and increase global growth via complementary international footprints
  • Gain needed scale for both businesses, without diluting focus

The deal is expected to finalize in 2H15.

In his analysis of the news, Larry Biegelsen of Wells Fargo noted that Wright presently generates about 60 percent of its revenue from lower extremity products, while Tornier nets a similar percentage from upper extremities. Upon completion, Wright expects the blended company to generate approximately 80 percent of total sales from upper and lower extremities, combined.

Overall, said Palmisano in the presentation call, “By leveraging our specialized sales force and our stronger expanded product portfolios, we will drive greater growth in what we calculate to be an $8 billion global market, growing annually at roughly eight percent to ten percent.”

Further, Palmisano said, “once integrated, we anticipate revenues for the combined businesses growing in the mid-teens, and adjusted EBITDA margins approaching 20 percent in three to four years. This is something that neither company could do on its own.”
Concurrent to the merger news, Wright announced receipt of its approvable letter from FDA for its Premarket Approval Application for Augment® Bone Graft. Approval was subject to customary facility inspections, which its supplier did not pass. Wright announced its vendor was prepared for reinspection after May 4.
When asked about potential supply constraints in anticipation of product launch, Palmisano noted that Wright recently bought a complete supply of platelet-derived growth factor from a manufacturer that was going out of business. That supply should support production for the next five years. Augment product sales are included in the company’s anticipated future growth in the mid-teens.
Following closure, the entity will conduct business as Wright Medical Group N.V., incorporated in the Netherlands, with U.S. headquarters in Memphis, Tennessee. The new entity will be led by current Wright President and CEO Robert Palmisano, who will maintain his title, and David Mowry, Tornier’s President and CEO, who will serve as Executive Vice President and Chief Operating Officer.
The companies have created a unified site, www.extremitiesleader.com, to present all transaction information to customers and shareholders.
Julie Vetalice is Content Coordinator at ORTHOWORLD. She can be reached by email.