Stryker, a global medical technology company, will make a voluntary general offer to acquire all shares of Hong Kong-based Trauson Holdings for $0.97 per ordinary share for a total consideration of $764 million in an all cash transaction, representing an enterprise value of approximately $685 million.
Trauson's controlling shareholder, Luna Group, has undertaken to accept the offer from Stryker by tendering 61.7% of the Trauson shares towards the offer. Founded in China in 1986 by chairman Fuqing Qian, Trauson had sales in 2011 approximating $60 million and is a trauma manufacturer in China and a competitor in the spine segment. Stryker and Trauson have maintained a relationship under an OEM agreement for instrumentation sets since 2007.
With this acquisition, Stryker will expand its presence in a key emerging market with a product portfolio and pipeline that is targeted at the large and fast growing value segment of the Chinese orthopedic market.
"The acquisition of Trauson is a critical step toward broadening our presence in China and developing a value segment platform for the emerging markets through a well established brand," said Kevin A. Lobo, president and CEO. "The acquisition of a leading player in the Chinese trauma and spine market underscores our commitment to strengthening our presence globally. With its research and development expertise, manufacturing capabilities and strength of its distribution network, Trauson is a compelling opportunity for Stryker to drive growth in China and other emerging markets for years to come."
Qian said, "The orthopedics market in China has great growth potential. The combined scale, local and global expertise, complementary product offerings and market breadth of Trauson and Stryker will create significant competitive advantages in the increasingly dynamic orthopaedic industry and provide a platform to fully realize the future growth opportunities in China and globally."
The closing of the transaction is subject to customary conditions. Upon closing, the transaction is expected to be neutral to Stryker's 2013 diluted net earnings per share excluding acquisition and integration-related charges and accretive thereafter. The transaction is expected to close by the end of the second quarter of 2013.
Barclays Capital served as Stryker's exclusive financial advisor and Sullivan & Cromwell served as outside legal counsel for Stryker in connection with this transaction.