In 2021, we have seen fewer acquisitions than in previous years. It seems that companies in the COVID era have thought twice about making them. However, we are sure that 2022 will be a busy year in this regard. Do not forget that although the spine market continues to grow, acquiring competitors is the fastest way to grow and increase market share. Just as an example, the Globus’s approach to Nuvasive only a few months ago.
List of the 5 most relevant acquisitions in 2021 in the spine market : (In this list, we have not included the acquisitions done by mutual funds as Zavation products by Gemspring Capital Management since they do not affect market shares).
1.-Nuvasive Acquired Simplify Medical
On February 24, Nuvasive announced that it has acquired Simplify Medical, a privately held company and developer of the Simplify® Cervical Artificial Disc (Simplify Disc) for cervical total disc replacement (cTDR).
Which is the reason?
- The acquisition of Simplify Medical adds the most clinically effective cTDR technology and further distinguishes NuVasive’s cervical portfolio in the market. The cervical segment of the global spine market represents a $2.6 billionopportunity, and the Company is well-positioned to expand its reach with the addition of the Simplify Disc to its C360™ portfolio. NuVasive is now able to address all key segments of the cervical spine by offering comprehensive, procedurally integrated solutions across anterior cervical discectomy and fusion (ACDF), posterior cervical fusion (PCF), and cTDR procedures.
- NuVasive will leverage its commercial and distribution channels in the U.S. and international markets to drive utilization of the Simplify Disc. The Company expects the acquisition to accelerate net sales growth and be accretive to non-GAAP diluted earnings per share in 2022. This reflects the technology’s favorable growth and margin profile, combined with NuVasive’s substantial commercial capability and C360 portfolio integration.
Transaction Details
Pursuant to the terms of the transaction agreement, NuVasive made an upfront payment to Simplify Medical of $150.0 million at closing, subject to customary purchase price adjustments, and agreed to make additional future payments contingent upon milestones related to regulatory approval and net sales from products incorporating the Simplify Cervical Artificial Disc technology. NuVasive funded the upfront payment at closing using available cash on hand.
2.-SeaSpine Acquires 7D Surgical
On March 22, 2021, SeaSpine announced that it has entered into an agreement to acquire all of the issued and outstanding shares of 7D Surgical, Inc., a privately-held, Toronto-based company, in a cash and stock deal valued at $110 million, subject to customary adjustments.
7D Surgical, a pioneer in the image-guided surgery market, has developed and commercialized advanced machine-vision-based registration algorithms to improve surgical workflow and patient care, currently with applications in spine and cranial surgeries. Its flagship system, founded on its machine-vision, image-guided surgery platform, reduces radiation exposure by eliminating intra-operative CT (computed tomography) and fluoroscopy for purposes of registration, both of which commonly are used for patient registration with traditional navigational systems. Notably, the 7D system is able to complete the entire patient registration process in less than 30 seconds, compared to 30 minutes typical with traditional systems.
Which is the reason?
The transaction is expected to contribute to revenue through the addition of the 7D customer base, as well as the opportunity to place additional systems on a capital-efficient basis by allowing hospitals to acquire them over time through the purchase of SeaSpine’s spinal implants and orthobiologics.The transaction also increases their flexibility with respect to hospital purchase commitments.
Transaction Terms
7D Surgical shareholders will receive an aggregate of 4,289,848 shares of SeaSpine stock, equivalent to $82.5 million based on the volume-weighted price between March 8, 2021 and March 19, 2021, and an aggregate of $27.5 million in cash. After giving effect to the transaction, 7D shareholders will hold approximately 13% of issued and outstanding SeaSpine shares (based on shares outstanding as of March 19, 2021). SeaSpine expects to finance the cash portion of the acquisition consideration from the more than $88 million of cash currently on-hand, which includes $20 million of recent borrowings under its $30 million credit facility.
3.-Implanet acquire Orthopaedic & Spine Development (OSD)
On March 30, 2021, IMPLANET announced that it has obtained founding shareholders’ agreement to acquire a majority stake in Orthopaedic & Spine Development (“OSD”), which specializes in developing, manufacturing and marketing implants for spine surgery.
Which are the reasons?
- Complementary ranges of implants for spine surgery,
- strong, direct positioning in the French market,
- commercial presence through subsidiaries in Germany and the United States,
- regionally complementary indirect distribution network,
- 510 (k) clearance enabling US market development and CE marking for the entire product range through 2024,
- solid regulatory platform and common notified body (LNE GMED),
- experienced management, acknowledged on its market, that is a shareholder in the new entity,
- common desire to achieve critical revenue mass, continued growth and margin improvement.
Transaction Details
This acquisition project is based on a valuation of OSD shares of €4.275 million for the entire capital of OSD. The acquisition of 100% of the shares, subject to the usual suspensive conditions, will be carried out by way of a sale (for 62.34%) and contributions (for 37.66%) by the shareholders. The proportion of shares will be divested for a price of €2.665 million, €0.5 million of which will be paid on the date of acquisition, and the remainder in the form of a 24-month sales credit guaranteed by a pledge on the OSD shares thus acquired. The portion of the contributed shares will be remunerated by the issuance of new Implanet shares (bonds redeemable in shares), corresponding to a value of €1.610 million.
4.-SpineVision acquires Global S
SpineVision is proud to announce the acquisition of Global S, a privately held Lyon-based company. Global S is a distributor specialized in spine surgery products that has a strong footprint in France and Switzerland.
Which is the reason?
This acquisition will consolidate SpineVision’s leadership position in France and bring new opportunities for Swiss market development.
5.-AddLife acquires MBA Incorporado
On December 22, 2021 AddLife continues its expansion in Europe and has today placed a bid for all shares in MBA Incorporado S.L (“MBA”), which has been accepted by Alantra Private Equity, which owns approximately 75 percent of the shares. The purchase price for 100 percent of the share capital has been agreed at EUR 111 million in cash and it is the parties’ intention that an acquisition agreement for all shares will be entered into during January 2022, after which access can take place.
Which is the reason?
Through the acquisition, AddLife becomes an even more attractive partner for leading suppliers in their niches and product areas in Europe. In addition, the acquisition creates the conditions for increasing internal cooperation and the opportunity to sell the Group’s own products in new markets as Spain, Italy and Portugal.
Transaction Terms
The purchase price amounts to a total of EUR 111 million and is financed through expanded credit facilities. MBA will be run as a separate subgroup and be part of the Medtech business area.