Stryker's first M&A target of 2014: A German surgical equipment maker

Earlier this year, Stryker ($SYK) CEO Kevin Lobo said he'll build higher 2014 sales through investments in innovation and globalization. More M&A is key to that strategy, and executives have sealed yet another deal. The Michigan device company said it will snatch up a German surgical equipment maker for $172 million.

Stryker CEO Kevin Lobo

Last year, Stryker pursued far more expensive acquisitions, including its $764 million buyout of Chinese orthopedics giant Trauson Holdings and its $1.7 billion M&A move for robot-assisted surgery outfit Mako ($MAKO). The company's plans to buy Berchtold Holding are more modest. But the deal, expected to close in the 2014 second quarter, is a smart one because it helps Stryker build one of its businesses and keep its "globalization" commitments in one fell swoop.

Berchtold makes and sells surgery basics, including surgical tables, lighting systems and equipment booms--all designed to help make operating rooms and ICUs more efficient and safe. Stryker sees those products as complementing its endoscopy division's operating room equipment roster, creating a broader range of offerings in the space for its global customers. Beyond that, Stryker also gains status with its particular acquisition target. Berchtold is longtime player in the operating room equipment space, having produced healthcare and surgical equipment for more than 90 years. Its sales in 2013 reached the $125 million mark.

Timothy Scannell, Stryker's group president of MedSurg and Neurotechnology, said in a statement that the company believes its latest acquisition will help "address rapidly evolving customer requirements for operating room design."

Once the deal closes, Stryker said it will be neutral to its 2014 earnings, save for charges relating to the acquisition, post-M&A integration and amortization charges.

The deal comes after a positive-to-mixed 2013. Stryker, which is best known for its orthopedic devices, pulled in $9 billion in net sales in 2013, up 4.2% from 2012. Net earnings hit $1 billion for the year, but that's down 22.5% over 2012 because of acquisition-related costs and metal hip-related recall expenses that hit harder earlier in the year.

- read the release

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