RTI’s board has unanimously approved the deal to sell its OEM business to a leading European private equity firm for a total of $490 million, with $480 million of the transaction paid in cash.Proceeds from the deal will be used to pay down debt and recapitalize the remaining business.
CEO Camille Farhat said: “The sale of the OEM business to Montagu completes the first phase of our strategic transformation to reduce complexity, drive operational excellence, and accelerate the growth of RTI Surgical. We are excited about this transaction, not only because of the value that is immediately created, but also because the OEM business is going to an experienced investor who understands the business and the expertise of the people and will support its growth and development.”
According to The Motley Fool as the deal closes, the “new” RTI will be a pure-play company for spinal implants. Management noted that the spine business generated revenue of about $118 million in 2019 with a gross margin of about 75%. What’s more, the company will be debt-free and have about $175 million in cash on the balance sheet. And management expects to launch at least 10 new products during each of the next two years.