MAKO Surgical Corp.
) surprised investors by announcing a deal to acquire its 4-year
partner Pipeline Biomedical Holdings when the company itself is
in the process of being acquired by leading medical device
DELCATH SYS INC (DCTH): Free Stock Analysis
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STRYKER CORP (SYK): Free Stock Analysis
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The transaction is valued at $2.5 million plus 3,953,771
unregistered shares of MAKO stock. Shares of MAKO touched 52-week
high of $29.59 and closed at $29.55 yesterday, which represented
a whopping year-to-date return of 127.5% and solid one-year
return of 66.2%.
Pipeline is attached with robotic assisted surgery developer MAKO
Surgical since 2010. It manufactures orthopedic devices and
related instruments for both robotic devices and medical
procedures and has been supplying implant technologies for MAKO's
advanced robotic arm Robotic Arm Interactive Orthopedic System,
or RIO, which includes RESTORIS PST Cup and Tapered Stem hip
implant system for use with the RIO's MAKOplasty Total Hip
The deal, which is expected to close by Oct 4, to some extent
justifies the hefty 85.5% premium paid by Stryker Corporation for
MAKO. Based in Fort Lauderdale, Fla., MAKO was founded in Nov
2004 and generated sales of $102.7 million last year. The deal
will allow SYK to get hold of MAKO's advanced robotic arm
technology, which helps orthopedic surgeons in performing knee
and hip joint replacement surgeries, as well as Pipeline
Biomedical's implant technologies.
Stryker believes MAKO's robotic technology has long-term
potential for human joint reconstruction. MAKO's pioneering RIO
system has not been widely adopted as it should be due to
inadequate training and marketing efforts. As a result, SYK
intends to fill up this gap by utilizing its efficient marketing
and training system and gain a competitive edge in the stagnant
hip-and-knee replacement market.
Secondly, post-acquisition, Stryker can proceed with the further
implant development for MAKO's technologies utilizing its own
R&D capabilities. MAKO Surgical lack resources compared to
Stryker in developing implants for its systems. Therefore, the
acquisition clearly bridges this gap and enables SYK to meet the
wider joint reconstruction needs.
Currently, MAKO Surgical retains a Zacks Rank #2 (Buy). Other
medical instruments stocks that are also worth a look include
Delcath Systems, Inc.
Echo Therapeutics, Inc.
). Both of them carry a Zacks Rank #2 (Buy).