Stryker Corp. (NYSE:SYK) agreed acquire Concentric Medical Inc. for $135 million in cash in a deal expected to close by the end of the year.
Mountain View, Calif.-based Concentric makes minimally invasive devices designed to remove the blood clots that cause ischemic stroke. If consummated, the deal will add to Stryker’s footprint in the neurovascular business, which is already sizable due to its $1.45 billion buyout of Boston Scientific’s (NYSE:BSX) neurovascular unit.
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Concentric launched a trial of its Trevo Retriever in February, touting the device as the first to use its Stentriever technology, “a novel method for retrieving clot from the neurovasculature.” Its Merci stroke treatment won reimbursement coverage in Japan in October 2010.
“We believe Stryker is the ideal strategic partner for Concentric and combining Concentric with Stryker’s Neurovascular division will provide opportunities to accelerate the development of technology and clinical evidence and will allow the commercial expansion of Concentric’s ischemic stroke therapy globally. Our team is excited to be joining the Stryker organization,” president and CEO Maria Sainz said in prepared remarks.
Stryker spent more than 58 percent of its cash reserves during the first quarter on the BSX acquisition. The Kalamazoo, Mich.-based medical device maker had more than $4.91 billion in working capital as of March 31, including $735 million in cash and cash equivalents. That’s a significant drop from the $6.02 billion in capital and $1.76 billion in cash it had going into 2011, reflecting the payment made to Boston Scientific Jan. 3 to close the deal, according to regulatory filings.
Stryker forked over about 12 percent of its total assets to do the deal, not including an additional $70 million it paid in charges related to the transaction.
The October 2010 announcement confirmed a deal that had been ground through the rumor mill for months. The cash deal includes another $50 million in milestone payments, contingent in part on the commercialization of the next iteration of Boston Scientific’s Target coils, which are delivered via catheter to treat hemorrhagic stroke. The milestones also depend on the successful transfer of manufacturing operations, expected to take about two years.
The BSX unit posted sales of about $348 million in 2009, but revenues have been on the slide for the better part of two years. At the time, Stryker officials said the acquisition would make the company a major player in the nearly $1 billion neurovascular market.