Tornier’s Acquisition Of OrthoHelix Results In Further Dilution

Tornier NV (TRNX) announced on Friday that it will acquire OrthoHelix Surgical Designs, in a deal valuing the firm at $135 million. Shares in Tornier ended the day with gains of 1.7%.
The Deal
Tornier announced that it will acquire OrthoHelix Surgical Designs, a global medical device company focused on providing surgical solutions to orthopedic extremity specialists. Tornier will pay $100 million in cash and $35 million in its own stock to acquire OrthoHelix. Tornier will make possible milestone payments in the coming two years.OrthoHelix is a medical device company developing implants and instruments used for small bone reconstructive surgery. The acquisition helps Tornier in getting more traction with lower extremity surgeons who focus on feet and ankles.
CEO Douglas Kohrs commented on the deal:
“We are pleased to welcome the employees, surgeon advisors, and distribution partners of OrthoHelix to Tornier. OrthoHelix’s innovative technology, products and surgeon focused culture will help us to take our Specialists Servings Specialists strategy to the next level”.
For its calendar year of 2012, OrthoHelix is expected to generate sales of $29 million, up 30% compared to 2011. The company expects to generate gross profit margins exceeding 80% and positive EBITDA. The transaction values OrthoHelix at 4.7 times annual revenues. This excludes the possible additional milestone payments in the coming two years.The acquisition will be financed with $35 million in stock and $100 million in cash. The deal will be financed with cash at hand and borrowings. The acquisition is dilutive to 2013’s earnings per share, and accretive to earnings per share in 2014.
The company continues to operate under its own name. Its 80 dedicated employees will continue to be based in Medina, Ohio.The transaction is subject to regulatory approval.