With Mako set for sale, Wright may be next orthopedic M&A target

Wright Medical CEO Robert Palmisano

Analysts see Stryker's ($SYK) $1.7 billion bid for Mako Surgical ($MAKO) as just the start of orthopedic device company M&A fever. They've zeroed in on Wright Medical ($WMGI) as the next tantalizing target.

Why would this be? Bloomberg reports, in part, that the offer that Stryker made for Mako represents a price that's 89% higher than the 20-day average of the company's stock. Stryker makes implants, medical equipment and surgical tools and Mako produces orthopedic implants and a cutting-edge robotic arm designed to aid hip replacement surgery. Their combination creates an orthopedics giant with advanced, buzz-worthy technology, and the argument is that device giants likely covet Wright and its smaller peers to spur growth and maintain competitiveness.

But Wright, which makes ankle and toe joint implants, sits at the top of the remaining orthopedic takeover targets, Bloomberg argues. The article cites Summer Street Research Partners, for example, which sees Wright as a viable target because it should see major growth in the coming years. Piper Jaffray analyst Matt Miksic agreed, telling Bloomberg that the M&A appetite is out there for companies that are in growing sectors, noting that "Wright Medical is one." And then there's Summer Street Research analyst Mark Landy, who is quoted in the story naming Wright as a "prime acquisition target" because of its potential to generate double-digit growth for several years.

Wright likely made itself more desirable by selling its hip and knee implant business to MicroPort Medical for $290 million so it could focus on extremities and biologics, Brean Capital's Jason Wittes is quoted as saying. That's key, he said, because Wright's focuses on foot and ankle implants--the fastest growing orthopedics sector.

There's more. Bloomberg, based on a compilation of analysts' estimates, notes that Wright's sales should surpass the $600 million mark by 2017, a 150% hike from 2013. Also, revenue should hit approximately $638 million in 2017, up from a predicted $239 million this year, according to the article.

And then there's this: Wright CEO Robert Palmisano has a history of selling companies he runs, the story points out.

Wright wouldn't comment for the Bloomberg piece. But the speculation won't go away. While Tournier ($TRNX) and NuVasive ($NUVA) may also be orthopedic device company takeover targets, the buzz remains that Wright is next on the list.

- read the Bloomberg story

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