Symmetry Medical: Surgical Maneuver Sets Up A Very Attractive Asymmetric Trade
- In August 2014, Symmetry Medical announced that it had agreed to sell its OEM Solutions business for cash and, simultaneously, spin-off its Symmetry Surgical business.
- Its muted share price reaction enables investors to speculate cheaply that a higher OEM Solutions bid may emerge, whilst buying into Symmetry Surgical at a very attractive price pre-separation.
- Symmetry Surgical has been negatively impacted by a number of acquisition integration issues. Yet, it remains a high margin business capable of generating impressive cash flows.
- Symmetry Medical’s share price implies that Symmetry Surgical is being valued at a significant discount to listed comparables. We estimate there is 70%+ upside potential for Symmetry Surgical.
- This is an 18-month trade with strong catalysts. The low OEM Solutions deal risk combined with SSRG’s inherit discount limits the downside, presenting a very attractive asymmetric trade.