Smith & Nephew Buys Austin-based ArthroCare for $1.7 Billion

imgres-2Smith & Nephew announced Monday a deal to buy ArthroCare Corp. of Austin for $1.7 billion.
The London-based company plans to pay $48.25 per share in cash for the the medical device company.
“This is a compelling opportunity to add ArthroCare’s technology and highly complementary products to further strengthen our sports medicine business,” Olivier Bohuon, Chief Executive Officer of Smith & Nephew, said in a news release. “Together, we will be able to generate significant additional revenue from the more comprehensive portfolio, combined sales force and Smith & Nephew’s global footprint. With this transaction, we are again accelerating our strategy to rebalance Smith & Nephew towards higher growth.”
The sales price is approximately 20 percent more than what ArthroCare’s shares have been trading for on the Nasdaq market for the 90 day average before the announcement. Smith & Nephew expects the transaction to close mid-year pending regulatory approval.
“ArthroCare and Smith & Nephew know each other well from our licensing and supply arrangements, and this is a natural transaction for both companies,” David Fitzgerald, president and CEO of ArthroCare, said in a news release. “The Board believes that this transaction is in the best interest of our shareholders.”
ArthroCare makes medical devices, instruments and implants. The company specializes in sports medication and ear, nose and throat procedures. It also provides products for the spine, wound care, urology and gynaecology practices.
Last year, ArthroCare bought ENTSurgical, a company founded by Fred Dinger in San Antonio, for $45 million. Dinger had previously sold another company he founded in San Antonio, OsteoBiologics for $72 million to Smith & Nephew Endoscopy in 2006.
ArthroCare has approximately 1,800 employees. It has manufacturing plants in Costa Rica and a research and development facility in Irvine, Calif. This year, the company announced that it had entered into a deferred prosecution agreement involving an ongoing investigation by the Department of Justice. The company paid a $30 million fine.
ArthroCare had total revenue for the first three quarters of 2013 of $276 million, up 2 percent from the same time period a year ago.

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