Medical technologies major
Stryker Corporation
(
SYK
) recently entered into a definitive agreement to buy
privately-owned Surpass Medical, Ltd. for $135 million. The deal
is expected to close in the fourth quarter of 2012, subject to
certain terms and conditions.
Per the terms of the deal, Stryker plans to acquire Surpass
through an all cash transaction of $100 million and has agreed to
make an additional milestone payment of $35 million. Stryker
exited the last reported second quarter of 2012 with cash and
cash equivalents and marketable securities of $3,460 million.
The acquisition of Surpass is in accordance with Stryker's
strategy to expand its foothold into the fast-growing
international markets via strategic acquisitions and new product
launches. However, it is expected to have a neutral impact on
Stryker's 2012 earnings per share, excluding acquisition and
integration-related expenses.
Headquartered in Tel Aviv, Israel, Surpass is a developer of
pioneering flow diversion stents to treat brain aneurysms.
Founded in 2005, the company has its manufacturing and research
and development (R&D) facilities located at Miramar, Florida.
Surpass' mainstay, the NeuroEndoGraft family of flow diverters,
received CE Mark approval in August 2011 and is available in
limited quantities outside the U.S. The company received Food and
Drug Administration (FDA) approval to launch its pivotal
Investigational Device Exemption (IDE) clinical trial in the
fourth quarter of 2012.
Surpass' unique product line will further bolster Stryker's
neurovascular business under the Neurotechnology and Spine
division and its Complete Stroke Care portfolio. Earlier, in
2011, Stryker acquired the Neurovascular division of
Boston Scientific Corporation
(
BSX
) as well as Concentric Medical, Inc. to build on its
neurovascular offerings.
With a market-cap of $19.9 billion, Stryker is one of the world's
largest medical device companies operating in the global
orthopedic market. The company is poised to grow on the back of a
well-diversified product portfolio along with solid business
fundamentals. However, end-market pressure in the Medsurg
business and a weak orthopedic market continue to plague Stryker.
Our Neutral recommendation on Stryker carries a short-term Zacks
#3 Rank (Hold).
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