Stryker Offers Good Core Growth, But Not As Much Value
Stephen Simpson, CFA
Stephen Simpson, CFA
Wed, Sep. 14, 8:37 AM
- Stryker (NYSE:SYK) inks an agreement to acquire privately held Instratek (Restore Surgical LLC) for an undisclosed sum. The transaction should close by year end.
- Houston, TX-based Instratek develops orthopedic implants and endoscopic instrumentation for use in extremity surgery (hand and foot conditions).
Tue, Feb. 16, 8:30 AM
- Stryker (NYSE:SYK) acquires vital signs monitor/defibrillator maker Physio-Control for $1.28B in cash from Bain Capital Private Equity. The deal should close in early Q2.
- The company revises its 2016 EPS guidance upward to $5.57 - 5.77 (+8.8 - 12.7%). For 2017, it expects the Sage and Physio-Control transactions to add $0.15 - 0.18 to EPS.
- Previously: Stryker buys ICU-focused Sage Products for $2.775B (Feb. 1)
- Update: The transaction was completed on April 5.
Mon, Feb. 1, 7:45 AM
- Stryker (NYSE:SYK) acquires privately-held Cary, IL-based Sage Products, LLC for $2.775B in cash. Sage develops and commercializes disposable products used in the Intensive Care Unit (ICU) and MedSurg hospital unit settings. It posted $430M in sales last year.
- The deal includes an anticipated future tax benefit of more than $500M.
- Management will host a conference call this morning at 8:00 am ET to discuss the transaction.
- Update: The transaction was completed on April 1.
Dec. 18, 2015, 10:31 AM
- M&A rumors are active this morning with the latest being Stryker (SYK -1%) eyeing Smith & Nephew (SNN +3.5%).
- Unsurprisingly, Merck (MRK -1.1%) continues to eye Relypsa (RLYP +0.9%).
- Previously: Relypsa up 17% on rumored Merck interest (Dec. 4)
- Update: Sources say the Stryker will pay ~$18B for SNN. A deal could be announced as early as next week.
Jul. 20, 2015, 8:37 AM
- Stryker (NYSE:SYK) acquires Kayseri, Turkey-based Muka Metal A.S., a maker of hospital beds, stretchers and related patient room furniture and accessories, for an undisclosed sum. The transaction, expected to be neutral to Stryker's 2015 EPS, should close in Q3.
- Timothy Scannell, Stryker Group President, MedSurg and Neurotechnology, says, " The acquisition of Muka aligns with our strategy to expand our global presence through existing channels with an established and trusted brand. This acquisition will bolster Stryker Medical's bed and stretcher offerings and is a compelling opportunity to drive growth in Turkey and other regions around the world."
Jan. 5, 2015, 9:35 AM
Dec. 23, 2014, 2:23 PM
Nov. 24, 2014, 5:19 PM
- Stryker (NYSE:SYK) is considering making a bid for medical device manufacturer Smith & Nephew (NYSE:SNN) as a standstill period that prevents it from making an offer nears its end, according to reports out earlier.
- SYK is examining structuring the deal as a tax inversion, allowing it to move its legal address to the lower-tax U.K., but SYK is said to see strong strategic reasons to pursue a combination aside from tax advantages, and an inversion would not be essential to make the deal work.
- J.P. Morgan analysts think an acquisition could be at least 7%-8% accretive to SYK's 2016 EPS, rising to 11% in 2017 and 13% in 2018, assuming a 30%-35% premium relative to the unaffected price and that the acquisition is not an inversion; however, the firm thinks SNN is not looking to sell, and a combination would not gain easy U.S. or EU anti-trust approval.
- SNN gained 4.3% and SYK rose 1.4% in today's trading.
Sep. 23, 2014, 7:45 AM
- U.S. Treasury Secretary Jack Lew says that the Obama Administration is prepared to institute rules to stop tax inversion deals. If so, it will do so without a sliver of Republican support. Barclays analyst Michael Leuchten says, "Washington is playing for time. It makes them look good and it allows Congress to maybe get its act together and maybe do something on the legislative side."
- Mr. Lew's comments have spooked the market a bit. European companies already involved in deals or rumored to be targets are all under pressure due to the perception that some of the deals already announced may be at risk.
- The U.S. firm in the best position is Horizon Pharma (NASDAQ:HZNP). It completed its tax inversion transaction with Ireland-based Vidara Therapeutics last week.
- Related tickers: (MDT -0.4%)(COV -0.5%)(ABBV -0.6%)(SHPG -0.7%)(OTCQB:SHPGF -1.5%)(PFE -0.7%)(AZN -0.1%)(SNN +0.1%)(SYK -0.8%)
Jul. 21, 2014, 7:15 AM
- Bloomberg reports that, according to analysts, there are three ex-U.S. medical firms that should be high on the target acquisition list for tax inversion deals. Ireland-based Perrigo (NYSE:PRGO), Switzerland-based Actelion and U.K.-based Smith & Nephew Plc (NYSE:SNN) (OTCQB:SNNUF) are all attractive targets. Observers believe there will be more acquisitions consummated before Congress puts limits on the maneuvers.
- Stryker (NYSE:SYK) has been mentioned as a potential suitor for Smith& Nephew. Pfizer (NYSE:PFE) may make another run at AstraZeneca (NYSE:AZN) after the end of the cool-off period.
Jun. 30, 2014, 10:34 AM
Jun. 4, 2014, 2:25 PM
- Bloomberg reports Medtronic (MDT +3.8%) is mulling a buyout offer for knee/hip implant maker Smith & Nephew (SNN +8.6%). SNN and i-banks are said to be "aware of Medtronic's interest.".
- The news service cautions Medtronic's prep work is at an early stage, and that "no offer is imminent." Nonetheless, Medtronic is viewed as "a more serious bidder" for SNN than Stryker (SYK -0.1%), previously rumored to be weighing an offer.
- Sources state a deal would likely result in Medtronic using SNN's corporate shell to change its legal residence to the U.K., and thereby take advantage of lower tax rates. Medtronic, which has a large offshore cash balance, has previously said it's open to a tax-inversion deal.
- Shares of both companies have spiked higher following the report. SNN's market cap is currently at $17B.
May 28, 2014, 10:46 AM
Feb. 18, 2014, 10:14 AM
- Stryker (SYK -0.1%) agrees to acquire privately-held surgical equipment company Berchtold for an enterprise value of $172M.
- Berchtold, which has operations in Germany and the U.S., generated sales of ~$125M last year; the company’s products include surgical tables, equipment booms and surgical lighting systems.
- SYK expects the transaction to be neutral to its 2014 earnings excluding acquisition, integration-related and intangible amortization charges.
Dec. 31, 2013, 9:11 AM
Sep. 25, 2013, 10:36 AM
- Stryker (SYK -2.3%) "is paying 12.4x EV/sales [for MAKO] on our 2013 sales estimate which is relatively high," Wells Fargo's Larry Biegelsen notes, adding that "the 2 most recent ortho deals, MDT's acquisition of Kanghui and SYK's acquisition of Trauson went for 11.6x and 8.7x, on an EV/sales basis respectively."
- Nevertheless, Biegelsen thinks SYK is getting a "differentiated asset" — Wells has been bullish on MAKO since May. SYK is reiterated at Outperform.
- TheStreet's Antoine Gara notes that as of September 13, 22% of MAKO's float was sold short.
- More on the deal here