Smith & Nephew (NYSE:SNN) said today that it’s dealing its gynecology business to Medtronic (NYSE:MDT), including the Truclear hysteroscopic resection and removal system, for $350 million.
The London-based healthcare giant said the Truclear device put up sales of $56 million last year, or just more than 1% of total revenues. The proceeds will go toward a $300 million stock buyback, Smith & Nephew said.
“Smith & Nephew’s management team has a strong track record of creating value through organic growth and by acquisition. The sale of our gynecology business demonstrates our disciplined strategic approach to capital deployment and to crystallizing value through divestiture at the right time,” CEO Olivier Bohuon said in prepared remarks. “The quality of the gynecology business was reflected by the strong interest from potential buyers, allowing us to obtain an attractive valuation. Our shareholders will benefit directly from the return of the proceeds through a share buy-back program, in-line with our capital allocation framework. Gynecology and its employees will benefit from a new owner with a synergistic platform looking to take the business to the next level.”
The company said it expects most of the gynecology unit’s employees to join Medtronic; Smith & Nephew said it plans to make the Truclear device for Medtronic during the transition. The deal is expected to close this summer, Medtronic said.
“We believe gynecology is one of the most underserved specialty procedure areas. Smith & Nephew has developed a rapidly growing business that expands minimally invasive treatment options for gynecology patients,” Medtronic’s surgical innovations president Chris Barry said in prepared remarks. “This acquisition expands our existing [gynecology] portfolio and we believe creates opportunities to further explore and develop global therapies and solutions that improve [gynecology] surgery.”
Medtronic said it expects the deal to be neutral to earning in fiscal 2017 and to add to earnings after that.