Integra LifeSciences Holdings Corporation says it plans to spin off its Spine business to Integra shareholders on a tax-free basis. The spin-off will create a new publicly traded company called SeaSpine focused on developing, marketing and selling spine hardware and orthobiologics.
Integra has been “rationalizing” its operations for a coupe of years now, culminating in this particular piece of “portfolio realignment.”
Integra’s Board of Directors has decided that a separation will provide both companies with the potential to grow more rapidly than they could do together, which is an interesting concept in itself, given the industry’s current propensity for consolidation. That said, there’s a good deal of logic in the move that will see SeaSpine become a stand-alone spine hardware and orthobiologics company, more free to to invest more in top-line growth initiatives, such as sales, marketing and R&D. Unburdened by its spine business, Integra believes it can enjoy accelerated operating margin expansion plans at the same time as the deal unlocks equity value for its shareholders.
The new SeaSpine will consist of a comprehensive portfolio of spinal hardware solutions, including unique interbody devices, minimally invasive surgery solutions, and deformity correction products, as well as IsoTis, a leading brand in orthobiologics, including a full range of osteoconductive and osteoinductive solutions utilizing unique demineralized bone, and synthetic matrices. The new spine business will operate as an independent, publicly held company with an estimated $140 million of trailing twelve month revenue as of September 30, 2014.
Integra says the transaction is expected to be completed within twelve months and result in two independent companies with strong balance sheets and access to the capital necessary to invest in their respective business priorities.
Personnel-wise, it’s less than two months since Integra announced the arrival of Mark Augusti, to be be responsible for the management of the company’s Spine and Extremities divisions. His name isn’t mentioned in the new press release which states that Kirt Stephenson, former Chief Executive Officer and Co-Founder of the old SeaSpine, will become Chairman of the Board of Directors of the new SeaSpine, with a search taking place to identify a Chief Executive Officer.
Integra will continue to focus on providing specialty surgical solutions, orthopedics and tissue technologies to surgeons. “These strategic changes create a much stronger platform for organic growth and execution, and we believe both companies will grow faster separately than together,” said Peter Arduini, Integra’s President and Chief Executive Officer. “Moving forward, Integra will have a simpler, more focused structure from which to operate, which should improve our ability to achieve our longer-term growth and margin improvement objectives. Further, we believe these moves create exciting opportunities for our shareholders and both organizations,” added Mr. Arduini.
“I’m excited about the opportunity to create another company focused on growth through new product development, strategic acquisitions and partnerships,” said Stuart Essig, Integra’s Chairman of the Board of Directors. “As a public company, SeaSpine will have a host of options to accelerate its growth and effectively invest in new business opportunities. The Board believes this will be achieved more fully as a stand-alone public company rather than through a strategic merger or divestiture of the business. Further, Rich Caruso, Integra’s Founder, and I personally look forward to remaining shareholders of both great companies.”
Source: Integra Lifesciences Holdings Corporation, Globe Newswire