By Thomas Lee
Medtronic Inc. (NYSE:MDT) hasn’t had much luck of late with orthopedics, particularly its spine business. But if Tornier Inc.’s planned $205 million IPO comes to fruition, the country’s largest medical device maker is looking at a huge pay day.
The Bakken Research Center in Maastricht, the Netherlands, home to Medtronic’s R&D operations in Europe, owns 2.8 million shares of Tornier stock, according to documents filed with the Securities and Exchange Commission. Also, in exchange for a $22 million loan in April 2009, Tornier granted BRC warrants to purchase 4.4 million shares at $5.66 each.
Split Rock Partners, an early stage venture capital firm in Eden Prairie, Minn., owns 271,920 shares. The firm’s $633, 213 loan netted it warrants to buy 126,413 shares at $5.66 each.
Tornier could be Split Rock’s second orthopedic coup in as many years. The company invested in Spine-Tech, which Sulzer Medica acquired for nearly $600 million in 1998, and now the spine division of Zimmer Medical, a major orthopedic company based in Warsaw, Indiana.
Until Tornier’s investment bankers establish a firm IPO price, we won’t know how much money is coming to Medtronic and Split Rock. But given Tornier’s target raise of $205 million, I think it’s safe to say it will be more than $5.66 a share.