Orthofix Returns To The Knitting As It Sells Breg In “Deleveraging Event”

In short

Orthofix International N.V., has announced that given a fair wind it will shortly be completing the sale of its Sports Medicine Business Unit, aka Breg, Inc., to a private equity firm called Water Street Healthcare Partners.

According to a press release, the purchase price is $157.5 million and is payable in cash at closing, which is expected to occur during the second fiscal quarter of 2012.


Orthofix describes itself as a diversified, global medical device company focused on developing and delivering innovative repair and regenerative solutions to the spine and orthopedic markets. It’s acquisition of Breg in 2003 for a reported $150M was a clear attempt to stretch the definition of its business and in so doing expand its orthopaedic, spinal and indeed trauma franchises with one bolt-on division. Whether this worked or not is open to question, but what is interesting is just how few companies choose to do this and how even fewer pull it off. Braces and surgery sound like good bedfellows, but they rarely prove to be so.

Whether Orthofix has come to this realisation or whether the company needed to divest Breg in order to meet prepayment of debt commitments as required by its existing credit agreement is almost a moot point. Probably a bit of both.

Company comments

From Orthofix

“With the divestiture of the Sports Medicine business, we are now able to devote Orthofix’s full resources and attention to strengthening our value proposition around our repair hardware and regenerative biologics and stimulation solutions,” said Robert Vaters, President and Chief Executive Officer. “We believe this deleveraging event and resulting borrowing capacity will allow us to expand and enhance both our Spine and Orthopedic business units in a way that accelerates our ability to create shareholder value.”

From Water Street

“We are pleased that Orthofix has entrusted Water Street to grow Breg. We see tremendous opportunity to build on Breg’s leadership position and create greater long-term value in the organization. We will leverage our team’s deep medical products knowledge, extensive operating experience and network of relationships to strategically expand Breg’s innovative products and global presence,” said Chris Sweeney, partner, Water Street.

Source: Orthofix, Business Wire