Stryker Agrees To Acquire Ascent For $525 Mln Cash - Update

(RTTNews) - Orthopedics products maker Stryker Corp. (SYK | Quote | Chart | News | PowerRating) announced Monday that it agreed to acquire privately-held Ascent Healthcare Solutions, Inc. for $525 million in an all cash deal.

The transaction has the approval of the board of directors of Stryker and Ascent Healthcare as well as the shareholders of Ascent Healthcare. The transaction, which is expected to close by the end of 2009, is expected to be neutral to Stryker's 2010 earnings per share and accretive thereafter.

However, Kalamazoo, Michigan-based Stryker said that the closure of the deal is conditioned on the expiration or termination of all applicable waiting periods pursuant to the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.

Phoenix, Arizona-based Ascent Healthcare Solutions is the market leader in the reprocessing and remanufacturing of medical devices in the U.S. This allows partner hospitals to divert thousands of pounds of medical waste from landfills and to redirect substantial financial resources to patient care quality initiatives. Ascent's sustainability programs deliver immediate results, driving critical supply chain savings, and supporting environmental stewardship and patient care initiatives.

Ascent had revealed in September that its partner hospitals saved an astounding $82 Million in unnecessary supply chain costs in the first half of 2009 with Ascent's reprocessing and remanufacturing programs. The program successfully diverted over 2.5 Million pounds or 1,286 tons of medical waste from local landfills in the first half of 2009.

Last month, Ascent announced that it has received the industry's first and only 510(K | Quote | Chart | News | PowerRating) clearance from the U.S. Food and Drug Administration or FDA to reprocess the Biosense Webster SoundStar 3D Diagnostic Ultrasound Catheter. With this new clearance, Ascent continues to lead the charge in bringing sustainability to healthcare, and represents an immediate savings opportunity of up to 51% of the cost of the original device.

In a statement, Stryker's Chief Executive Officer Stephen MacMillan said, "The acquisition of Ascent Healthcare Solutions with its talented team will enhance our value proposition to hospitals and healthcare providers. Conducted in accordance with FDA regulations, reprocessing and remanufacturing is one of the most impactful programs in use at hospitals, allowing for significant costs savings to the healthcare system.

Following the closure of the proposed acquisition, the Ascent Healthcare Solutions business will become a division of Stryker operating under the MedSurg group of businesses and will continue to be known by its current name itself.

Ascent was formed through the merger of Vanguard Medical Concepts and Alliance Medical Corp. in December 2005, who were the two leading players in the reprocessing and remanufacturing of medical devices, with state of the art reprocessing facilities in Phoenix, Arizona and Lakeland, Florida.

Earlier in the month, Stryker announced the acquisition of a privately held, software technology firm OtisMed Corp., which will operate as part of Stryker's Orthopaedics Division and remain located in Alameda, California. OtisMed will focus on customizable instrumentation that has the potential to complement the many benefits that surgeons and patients realize from Stryker's Triathlon Knee System, as well as other Stryker implants.

On the same day, Stryker also agreed to acquire a Japanese company Mutoh Co., Ltd. along with certain of its affiliates, as well as medical device company Synergetics USA, Inc. (SURG | Quote | Chart | News | PowerRating). These products will be incorporated into Stryker's Instruments Division which is headquartered in Kalamazoo, Michigan. The closing of these combined transactions is anticipated to occur prior to December 31, 2009, and include $67 million in upfront payments as well as potential future milestone and royalty payments of up to an additional $36 million.

Last month, Stryker reported a 16.4% year-over-year decline in profit for the third quarter, hurt by restructuring charges. The company's net earnings for the third quarter dropped to $229.0 million from $273.8 million in the year-earlier quarter. On a per share basis, earnings slid to $0.58 from $0.67 in the year-ago quarter. Quarterly net sales were flat with last year at $1.65 billion.

In Monday's regular trading session, SYK is currently trading at $50.44, up $0.75 or 1.51% on a volume of 0.86 million shares. In the past 52-week period, the stock has been trading in a range of $30.82 to $51.32.

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