Wright Medical Group, a global orthopedic medical device company, and BioMimetic Therapeutics, a biotech specializing in products to promote the healing of musculoskeletal injuries and diseases, have entered into a definitive agreement for a business combination of the Tennessee-based companies.

The transaction will combine BioMimetic's biologics platform and pipeline with Wright's established sales force and product portfolio, to further accelerate growth opportunities in Wright's extremities business.

The move has a total potential value for BioMimetic shareholders of approximately $380 million, or $12.97 per share, based on Wright's closing stock price on November 16, 2012. Each share of BioMimetic common stock will be converted into the right to receive an upfront payment of $1.50 in cash and 0.2482 shares of Wright common stock. The upfront payment values BioMimetic at approximately $190 million, or $6.47 per share, based on Wright's closing stock price on November 16, 2012. Each BioMimetic share will also receive one tradable Contingent Value Right (CVR), which entitles its holder to receive additional cash payments of up to $6.50 per share, which are payable upon receipt of FDA approval of BoiMimetic’s novel protein therapeutic product, Augment Bone Graft, and upon achieving certain revenue milestones.

The transaction is expected to close in the first quarter of 2013 and is subject to customary closing conditions, including BioMimetic shareholder approval. The transaction received the unanimous approval of the board of directors of both Wright and BioMimetic. In addition, several key shareholders of BioMimetic have evidenced their support of the transaction by entering into agreements to vote in favor of the transaction.

"We believe this transaction will significantly accelerate the continued transformation of our business as well as our strategy of building a world-class biologics platform and growing our foot and ankle business at well above market growth rates,” said Robert Palmisano, president and CEO of Wright. “BioMimetic's products complement our existing biologics product portfolio, and, if approved by the FDA as we expect, Augment Bone Graft will provide us with a unique solution for the U.S. hindfoot and ankle fusion market that leverages the distribution capabilities of Wright's dedicated foot and ankle sales organization and our physician training capabilities."

Although Wright cannot finalize the purchase price allocation and fair value assessment of the contingent consideration until the closing, Wright anticipates that the transaction will be dilutive to adjusted EBITDA until the second full-year post-FDA approval of Augment Bone Graft and accretive thereafter.

In connection with this transaction, J.P. Morgan Securities and Wilson Sonsini Goodrich & Rosati advised Wright Medical, and Goldman, Sachs and Ropes & Gray advised BioMimetic Therapeutics.