By RTT News,
August 04, 2014, 12:44:00 PM EDT
(RTTNews.com) - Medical device solutions provider Symmetry Medical Inc ( SMA ), Monday agreed to sell its OEM Solutions business to Tecomet for $450 million. Concurrently, Symmetry will spin off and transfer its shareholders ownership in a new company holding its Symmetry Surgical business.
The deal with Tecomet is valued at $7.50 per share after fees and elimination of outstanding debt, said Symmetry, based in Warsaw, Indiana. Tecomet, based in Wilmington, Massachusetts, is a Genstar Capital portfolio company and precision contract manufacturer supporting medical devices and aerospace industries.
OEM Solutions has over 450 customers, nearly 2,300 employees and 13 facilities in the U.S., the U.K., Ireland, France and Malaysia.
As for the spin-off, Symmetry Surgical will become a newly traded public company, with Symmetry Medical shareholders receiving one share in the public company for every four shares of Symmetry Medical stock.
Symmetry shares were up 10 percent in morning trade on the New York Stock Exchange, following the news.
Symmetry Chief Executive Thomas Sullivan said, "We are excited to reach this agreement with Tecomet, which will recognize the value of the OEM Solutions business and enhance the growth potential of Symmetry Surgical."
Stating the rationale behind the deal with Tecomet, Symmetry said recent transactions imply a risk of consolidation in OEM Solutions competitive market, increasing the need for Symmetry Medical to explore acquisitions to maintain a leadership position.
Also OEM Solutions customer consolidation could result in customer conflicts with Symmetry Surgical as a re-usable general surgical instrument company.
Symmetry Medical currently expects that the transaction to be completed by the end of 2014.
Symmetry's range of medical device solutions include surgical instruments, orthopedic implants, and sterilization cases and trays.
Earlier today, Symmetry said it slipped to a loss for the second quarter, hurt mainly by impairment charges. The company reported a net loss of $6.6 million or $0.07 per share, compared with a profit of $1.2 million or $0.04 per share last year. Adjusted earnings increased to $0.17 per share from $0.09 per share. Revenue for the quarter rose to $101.3 million from $99 million last year.
Analysts polled by Thomson Reuters projected earnings of $0.12 per share on revenue of $99.2 million for the quarter. Analysts' estimates typically exclude special items.
Symmetry Medical is trading at $9.66, up $0.85 or 9.65%, on a volume of 0.93 million shares.
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