Wright Medical (NSDQ:WMGI) said today that it agreed to deal its large joints business to Corin Orthopaedics Holdings for about $33 million in cash.
The €29.7 million transaction, which is expected to close by the end of the 3rd quarter or early in the 4th quarter, involves legacy hip and knee implants from Tornier; Wright and Tornier merged in a $3.3 billion deal in October 2015.
Wright itself got out of the hip and knee space in June 2013 with the $290 million sale of its OrthoRecon business to Hong Kong-based MicroPort Scientific (HK:0853).
The assets included in the sale to Corin, which are mostly sold in Europe, are the Dynacup and Meije Duo hip implants and HLS KneeTec and HLS Noetos knee implants. After a transition period they’ll be re-branded under the Corin banner; the business will keep its base in Montbonnot, France, Wright said.
Net proceeds from the sale are expected to be about $20 million, according to Wright, which said it had projected $37 million in sales for the business this year. Adjusted earnings before interest, taxes, debt and amortization were pegged at $5 million to $6 million; the loss of the revenue stream prompted Wright to cut its sales outlook from between $705 million and $715 million to between $668 million and $678 million.
The company stood pat on its EBITDA forecast, however, saying it still expects them to be $30 million to $35 million.
“Our large joints business has excellent products and significant market share in key European markets with a loyal customer base. However, this business is not in line with our strategy to be the premier extremities and biologics company. The sale of this business to a strong business partner that is focused on the hip and knee market is the logical next strategic step for Wright. Once completed, this should enable both businesses to flourish as separate companies focused in their unique market spaces with strong management teams that will position them for continued success. In addition, post-closing, we will be able to devote our full resources and attention on accelerating growth opportunities in the high-growth extremities and biologics markets and believe this will enhance our ability to create significant shareholder value,” Wright president & CEO Robert Palmisano said in prepared remarks. “We are pleased we have found an excellent strategic buyer in Corin, a company that is deeply committed to the success of the hip and knee business and will continue to provide the focus and investment to enable it to reach its full potential. Also, very importantly, this will provide our employees with enhanced opportunities for career growth and development. We are grateful to our large joint employees for their dedication and hard work.”
“We are delighted with the acquisition of Tornier’s clinically proven portfolio of hips and knees. Tornier’s hip and knee portfolio has been a key part of the history of orthopedics and has always been a significant driver of improving the clinical outcome for patients across the globe. Corin is focused on hip and knee joint replacement and is excited to become a major part of the innovative French clinical community. We are looking forward to working closely with Tornier’s thought leaders and surgeons and to welcoming their talented large joints team based in Montbonnot into our global organization. We trust we will be worthy custodians of Tornier’s large joints portfolio,” added Corin CEO Stefano Alfonsi.
WMGI shares ticked down -0.2% to $19.76 today in early trading.