Integra LifeSciences Wants J&J’s Codman Neurosurgery Business February 23, 2017

J&J looks to have unburdened itself of its Neurosurgery business in a deal which sees Integra Lifesciences paying $1.045 billion.

Background

Integra LifeSciences Holdings Corporation has made a binding offer to acquire the Johnson & Johnson Codman Neurosurgery business for a price of $1.045 billion in cash. The deal does not include Codman Neurovascular, which seems to be J&J’s favoured neuro child, having been boosted by a raft of new products, acquisitions and distribution agreements in recent years, in stark contrast to its surgical brother.

Nonetheless the acquisition would be a good fit for Intergra, which will be bolting on a portfolio of devices focused on advanced hydrocephalus, neuro-critical care and operative neurosurgery. Codman’s existing portfolio and new product pipeline complement Integra’s leading products and pipeline in tissue ablation, dural repair and cranial stabilization. The products to be acquired generated approximately $370 million in revenue during 2016 with an (unaudited) EBITDA margin of about 31%.

It certainly sounds like a done-deal, Integra having already put in place a detailed integration plan with a dedicated team comprising senior management from both Integra and Codman Neurosurgery. It has also engaged a management strategy consulting firm, as well as specialized consulting firms in certain functional areas, to enhance the integration team’s efforts.

Integra says it expects the acquisition to accelerate the path to achieving its aspirational targets of $2 billion in revenue and 30% adjusted EBITDA margin. It expects the Codman Neurosurgery revenue to experience some initial disruption in the first year of the combination, and to then grow 3% to 6% longer term.

The transaction is expected to close in two steps: first, in the approximately 24 principal countries during the fourth quarter of 2017; and subsequently, in the remaining countries on a rolling basis.

Company comments

Integra reckons this comprehensive portfolio will give it top dog status, saying in its release that “If the binding offer is accepted, upon closing, Integra will be a leading global provider of neurosurgical products.”

“This proposed transformational acquisition of Codman Neurosurgery creates compelling value for our shareholders, employees and patients,” said Peter Arduini, Integra’s president and chief executive officer. “Its innovative portfolio and global reach will enable us to enhance our position in the neurosurgery market, while also building a global infrastructure that will benefit Integra as a whole. We look forward to welcoming the more than 600 Codman Neurosurgery employees to the Integra team.”

Source: Globe Newswire


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