Tornier, Wright merger to close soon, due to foot and ankle implant divestiture

Salto Talaris total ankle replacement system--Courtesy of Tornier

Tornier ($TRNX) just announced a divestiture needed to secure completion of its $3.3 billion merger with Wright Medical ($WMGI). Integra Lifesciences ($IART) will acquire Tornier's ankle and toe replacement orthopedic devices in the U.S. for an undisclosed amount. It also gained an option to purchase the ex-U.S. rights to Tornier's toe replacement devices.

The divestiture was expected because Wright also sells foot and ankle devices, leading to scrutiny from the Federal Trade Commission. In February, Leerink equity analyst Richard Newitter previously said that, "A divestiture-less deal would be preferred, but we knew it was a possibility and $15-20M is about what we would have expected to be 'under the FTC microscope."

In fact, revenue from the devices was about $15.5 million in the U.S., Integra says. The implants to be acquired are Tornier's Salto Talaris and Salto XT for ankle replacement, and the company's Futura for silastic toe replacement. The option to purchase ex-U.S. toe replacement implants in the future includes the Salto Talaris, Salto XT, Salto Mobile and Futura silastic toe replacement devices.

Upon closure of the inversion deal, the new company, Netherlands-based Wright Medical Group N.V., will rely on Wright Medical's foot devices for its toehold in that segment of the orthopedics market. They include the Inbone and Infinity total ankle systems, and the MiToe implant for hammertoe (a deformed toe).

"We are pleased with reaching this point in the divestiture process as well as with the quality of the buyer for these assets and to have completed this important step toward our pending merger with Wright," Tornier CEO David Mowry, said in a statement.

InBone total ankle replacement system--Courtesy of Tornier

Announced in October, the deal was originally expected to close in the first half of 2015. It's a rare merger of equals. At the time of the announcement, Tornier ($TRNX) quarterly revenues were $76.7 million, while Wright ($WMGI) reported quarterly net sales of $71.3 million.

Both sets of shareholders have signed off on the deal, so closure should occur soon.

In July Integra spun off its spinal implants and orthobiologics into a new, publicly traded company dubbed SeaSpine, as it sought to focus on select areas, including orthopedics targeting the extremities, an where it already sells a variety of implants.

"This acquisition broadens our extremity product portfolio by adding commercially available products," said Mark Augusti, the president of Integra's orthopedics and tissue technologies business, in a statement. "It allows us to diversify our lower extremity portfolio and accelerates our entry into the U.S. total ankle replacement segment of the foot and ankle market."

- read the release

Special Report: The 10 largest med tech M&A deals announced in 2014 - Wright/Tornier

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