Stryker Corp. (NYSE:SYK) launched its $3.85-per-share tender offer for Orthovita Inc. (NSDQ:VITA) as it looks to fill the void left by the sale of its troubled OP-1 assets.
Last week Stryker announced that it would pay $316 million in cash for Malvern, Pa.-based Orthovita, which makes a suite of products for the fusion, regeneration and fracture fixation of human bone, including Vitoss, a bone graft substitute, and Cortoss, a bone augmentation material. The offer is contingent on a majority of shareholdering tendering their stakes and is set to expire at midnight June 24.
The deal represents a 41 percent premium on VITA’s closing price of $2.73 per share May 13. It’s expected to close during the second quarter.
Stryker called the acquisition “highly complementary to Stryker’s existing orthobiologics offering” in a statement emailed to MassDevice.com.
Orthovita reported a $1.16 million loss on $23.7 million in sales during the three months ended March 31, compared with $1.18 million in losses on $24 million in sales during the same period last year. The company had just more than $59.7 million in assets at the end of the quarter, including $8.3 million in cash and equivalents.
Orthovita’s product line could potentially fill the hole left at Stryker by its offloaded its troubled OP-1 bone growth implants family to Japan-based Olympus Corp. for $60 million in December 2010.
The deal marked a a step towards Stryker freeing itself of the legal woes related to allegations it promoted the off-label combination of two of its bone growth products.
Federal investigators in Oct. 2009 indicted the company and four managers charging that they led a two-year campaign to promote the combined use of separate bone-healing products, each granted a narrow, provisional “humanitarian device exemption” by the FDA. Combining the treatments and devices — the OP-1 Implant, OP-1 Putty and the bone void filler Calstrux — caused adverse effects in patients ranging from minor irritations to infections requiring follow-up surgeries. The indictment also charged that Stryker and former Stryker Biotech president Mark Philip lied to the FDA about the number of patients treated each year with OP-1 Putty.
The legal proceedings are still ongoing and in November federal prosecutors blasted Stryker Biotech, its former president and three sales reps for seeking the dismissal of the bulk of the 16 criminal charges pending against them in a federal case alleging the illegal promotion of the bone putties.