|Symmetry Medical's shoulder surgery instruments--Courtesy of Symmetry|
When Genstar Capital acquired orthopedic implant company Tecomet in December, the private equity firm aimed to build up the company's growth both organically and through acquisitions. It's making good on the latter strategy with the newly announced purchase of the equipment business of Symmetry Medical ($SMA) for $450 million.
This OEM Solutions unit manufactures high-precision surgical instruments and orthopedic implants, as well as plastic and metal sterilization cases and trays. During the second quarter, Symmetry Medical had $80.9 million in revenues from this business, up 5% from the same quarter a year ago. Instruments accounted for $28.1 million of that total, while implants were $29.4 million and cases were $17.3 million.
"The combination of Tecomet and OEM Solutions creates a contract manufacturing enterprise that is capable of meeting the growing needs of our customers. OEM Solutions will not only extend the capabilities we offer but also our global reach," Tecomet CEO Bill Dow said in a statement.
The Symmetry unit has more than 450 customers, almost 2,300 employees and 13 facilities in the U.S., the U.K., Ireland, France and Malaysia. The boards of both companies have approved the deal, which is slated to close in the fourth quarter. Symmetry itself bought the surgical instruments unit from Johnson & Johnson ($JNJ) for $165 million in 2011.
OEM represented about 80% of Symmetry Medical's revenues during the second quarter, with the remainder being $20.4 million in surgical revenue. Still, the deal value is more than the valuation of the entire company.
Under the deal, Tecomet will buy the business for $450 million in cash, or $7.50 per share, after fees and elimination of outstanding debt. The remainder of the company, Symmetry Surgical, will become a new, publicly traded company, and Symmetry Medical shareholders will receive one share in the new company for every four shares of Symmetry Medical.
Symmetry Medical President and CEO Thomas Sullivan said in a release that the deal "provides liquidity for our shareholders along with the upside potential of Symmetry Surgical."
In early trading on the news, Symmetry Medical climbed 9% on the news to a market cap of about $360 million.
- here is the Tecomet release
- and the Symmetry release