Stryker buys Chinese Orthopedic company for $764 million

Posted on | January 17, 2013 | No Comments

Trauson Jumps by Record After $764 Million Stryker Offer?(Bloomberg)

Trauson Holdings Co. (325)?advanced by a record 42 percent in Hong Kong trading after?Stryker Corp. (SYK)?offered $764 million in cash to acquire the Chinese maker orthopedic implants.

Trauson?climbed?as much as HK$2.18 to HK$7.34, the most since it started trading in June 2010. The?stock?changed hands at HK$7.23 as of 10:26 a.m. Hong Kong time, on trading volume that was more than 40 times the daily average over the past three months.

Orthopedic implant sales in?China?will almost double to $2.7 billion by 2015, vaulting the country past?Japan?as the biggest market after the U.S., according to?Frost & Sullivan, a market research company. Trauson makes pelvic reconstruction plates and other products used in trauma surgery.

?In a highly fragmented Chinese market, Trauson is the largest distributor of trauma products and the No. 3 distributor in spine,??Michael Weinstein, an analyst at JPMorgan Chase & Co. in New York, wrote in a note to clients yesterday. ?Trauson is highly profitable with gross margins in the high 60 percent range.?

Gross?margin?for the Changzhou, China-based company was 67 percent in the six months through June and averaged 71 percent since the first half of 2009, according to data compiled by Bloomberg.

?The acquisition of Trauson is a critical step toward broadening our presence in China and developing a value segment platform for the?emerging markets?through a well-established brand,? Stryker Chief Executive Officer Kevin A. Lobo said in a statement.

The two medical device makers have had a relationship under a manufacturing agreement for instrumentation sets since 2007, Kalamazoo, Michigan-based Stryker said.

Stryker rose 2 percent to $60.62 at the close yesterday in?New York. The shares have gained 17 percent in the past year.

Trauson doubled in value last year after tumbling 52 percent in 2011. The stock resumed trading today after having been halted on Jan. 8.

Stryker is offering HK$7.50 per ordinary Trauson share in cash, 45 percent more than the last traded price of HK$5.16. Luna Group has agreed to tender 61.7 percent of Trauson?s shares, Stryker said.

The deal is expected to be neutral to Stryker?s 2013 diluted earnings per share, excluding one-time acquisition- related charges, and to add to earnings after that, Stryker said. The transaction is expected to close by the end of the second quarter this year.

Barclays Plc?s investment bank served as Stryker?s financial adviser and Sullivan & Cromwell served as the company?s legal counsel on the deal.

To contact the reporters on this story: Kim McLaughlin in Stockholm atkmclaughlin6@bloomberg.net; Michelle Fay Cortez in Minneapolis at?mcortez@bloomberg.net

To contact the editors responsible for this story: Phil Serafino at?pserafino@bloomberg.net; Jason Gale at?j.gale@bloomberg.net

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Source: http://orthostreams.com/2013/01/stryker-buys-chinese-orthopedic-company-for-764-million/

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