Markets

Wright Medical, Tornier Merger Receives FTC Approval

Wright Medical Group WMGI and Tornier NV recently received approval from Federal Trade Commission (FTC) for their previously announced merger. However, the conditional approval requires Wright Medical to divest Tornier's U.S. rights and assets related to total ankle replacements and total silastic toe joint replacements, which are used to treat arthritis.

The FTC approval is a big relief for both the companies. In June, majority shareholders of the companies (97.7% of shareholders of Wright Medical and 99.4% of Tornier shareholders) sanctioned the deal, which was announced in Oct 2014. Notably, this transaction will create a merged entity worth $3.3 billion.

Wright Medical has traditionally relied on its lower extremities offerings while, Tornier commands expertise in upper extremities. The merger eyes the formation of a company that will possess the most comprehensive upper and lower extremity portfolios in the market.

The Tornier merger has significant long-term prospects for Wright Medical. The transaction, once successfully completed, is expected to create a more diversified and high growth extremities-biologics pure-play with broad reach across three of the fastest growing orthopedic markets (shoulder, foot & ankle and biologics).

The approval comes at an opportune time for Wright Medical. The company recently got FDA approval for its Augment Bone Graft product which allows its sale in the U.S. as an alternative to autograft for ankle and/or hind foot fusion indications. Post approval, the company expects revenues of $10-$12 million from the product over the next six to eight months.

We believe that there will be a significant increase in Wright Medical's profits and a subsequent expansion in margins after the completion of the Tornier merger and the commercialization of Augment Bone Graft.

However, escalating international infrastructure costs will act as a major headwind.

Zacks Rank & Key Picks

Currently, Wright Medical has a Zacks Rank #3 (Hold).

Better-ranked stocks in the Medical Products industry include ICU Medical ICUI , Capricor Therapeutics CAPR and OraSure Technologies OSUR . All the stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

WRIGHT MEDICAL (WMGI): Free Stock Analysis Report

ORASURE TECH (OSUR): Free Stock Analysis Report

ICU MEDICAL INC (ICUI): Free Stock Analysis Report

CAPRICOR THERAP (CAPR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ICUI WMGI OSUR CAPR

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More