Stryker ($SYK) has wrapped up its $764 million acquisition of Trauson Holdings, giving it a major foothold in China's orthopedics device industry.
In 2011, Trauson posted about $60 million in sales, and Stryker says the company is China's largest manufacturer of trauma devices. With the buyout, Stryker boosts its presence in the fast-growing market, and, by snatching up an already dominant firm, the Michigan devicemaker can hit the ground running with Trauson's R&D prowess and local distribution network.
"The acquisition of Trauson is a critical step toward broadening our presence in China and developing a value segment platform for the emerging markets through a well-established brand," Stryker CEO Kevin Lobo said when the deal was announced in January.
Stryker has been on the up and up in terms of revenue lately, growing 5.5% last quarter, but soaring charges related to hip implant recalls and sluggish overseas performances have dragged down much of the company's progress.
International sales for Stryker's hip, knee and extremities devices all declined in the fourth quarter, but, if the Trauson deal works out the way Lobo plans, that all could change. The Chinese company leads the local market in reconstructive devices like pelvic plates and artificial joints, technologies that will likely only increase in value as China's giant population continues to age.
Similar thinking motivated Medtronic's ($MDT) $816 million buyout of Kanghui Holdings last year, snatching up a player in the Chinese orthopedics world as part of CEO Omar Ishrak's mission to grow the company's emerging markets presence. The same goes for the likes of Covidien ($COV), Johnson & Johnson ($JNJ) and GE Healthcare ($GE), all of which have launched R&D operations in China to tap the swelling market for devices there.
- read Stryker's announcement