The deal, which is expected to close in the first half of 2020, includes $480 million in cash from United Kingdom-based Montagu to RTI Surgical, plus certain other considerations worth the additional $10 million.
Although the RTI Surgical board of directors unanimously approved the transaction, it remains subject to approval from the company’s shareholders, the customary regular approvals and the satisfaction of customary closing conditions.
Once completed, Deerfield, Ill.-based RTI Surgical plans to focus on growth and innovation as a global pure-play spine business, according to a news release. The company expects to use proceeds from the sale to pay down debt and boost investment in the company’s global spine portfolio.
RTI Surgical president & CEO Camille Farhat said the company estimates the spine business will have generated global revenues from $118 million to $119 million with gross margins of approximately 75% in 2019, and it is expected to be debt-free with approximately $175 million to $200 million in cash to support growth after the transaction.
The company expects to introduce at least 10 new products to its portfolio over the next two years, according to Farhat.
“The sale of the OEM business to Montagu completes the first phase of our strategic transformation to reduce complexity, drive operational excellence and accelerate the growth of RTI Surgical,” Farhat said in the news release. “We are excited about this transaction, not only because of the value that is immediately created, but also because the OEM business is going to an experienced investor who understands the business and the expertise of the people and will support its growth and development.”
“We are vested in continuing to build customer intimacy in service of our existing and future partners and continuing our legacy of serving more patients and maximizing the gift of donation,” added RTI Surgical OEM business president Olivier Visa. “We look forward to working with Montagu in driving the growth of the business and deepening the significant expertise and core competencies we have developed to serve more patients.”
“As a strong, resilient business that is well-positioned to capitalize on accelerated growth opportunities, RTI’s OEM business is an excellent fit for Montagu’s investment strategy,” Montagu director Guillaume Jabalot said. “We look forward to working with Olivier and the team to support the business in this exciting next chapter of growth, maintaining its ethos of exceptional service and innovation.”