A bidding war with another, un-named suitor drove up the price Stryker Corp. (NYSE: SYK) paid for Orthovita Inc. (NSDQ:VITA) by at least $16 million, according to regulatory documents.
Stryker, which acquired the Malvern, PA.-based orthobiologic and biosurgery products maker in late May, was one of two companies seriously bidding for the right to acquire Orthovita. Kalamzaoo, Mich.-based Stryker eventually took the prize with a $3.85-per-share offer worth $316 million. The final purchase price was at least 25 cents a share higher than the company’s initial bid.
Stryker launched its tender offer May 27, representing a 41 percent premium on VITA’s closing price of $2.73 per share May 13 and capping a process that began more than a year before. That was when Antony Koblish, Orthovita’s president & CEO, received an unsolicited bid from an undisclosed suitor, according to regulatory documents.
That conversation sparked a November 5, 2010, offer from the mystery company to purchase Orthovita for $3.50 a share, according to the filings. Orthovita’s board rejected that offer and turned to J.P. Morgan Securities LLC, its financial advisor, to drum up interest elsewhere.
Stryker and a third, unnamed company became involved in January 2011, when both firms were contacted by JP Morgan. Stryker indicated that it had a “non-binding indication of interest” to purchase all outstanding shares of Orthovita for a price between $3.50 and $4.00 per share. The competing suitor began pursuing Orthovita aggressively, matching Stryker’s price range and prompting the orthopedics giant to .
On April 1, Stryker made its first hard offer at $3.60 per share, increasing it to $3.70 two weeks later. The competition continued to pursue Orthovita throughout April, asking for more time as it prepared its Q1 financial results, set for publication during the first week in May. The continued interest from a credible third party gave Orthovita’s board the confidence to reject Stryker’s offer.
The haggling continued through the end of the month, with Stryker upping the ante to $3.85, indicating that was as high as it was willing to go and sweetening the pot further with employment agreements for several of Orthovita’s senior leaders. That, plus the 41 percent premium on the share price, inclined the board to accept Stryker’s offer in mid-May — and leave the still-unidentified competition behind.