Wright Medical (NSDQ:WMGI) said it agreed to sell its OrthoRecon hip and knee business to Hong Kong-based MicroPort Scientific (HK:0853) for $290 million in cash.
MicroPort’s shareholders must still approve the deal, which is expected to close by the end of the 3rd quarter or early in the 4th, if the Chinese firm’s shareholders give the OK, according to a press release.
The hip and knee implant division brought in $263 million for Arlington, Tenn.-based Wright last year, according to the release, representing 54.4% of its total 2012 sales. The move is expected to yield roughly $260 million, which Wright plans to use to grow its extremities business.
Although the company suspended its guidance for the rest of the year, saying it will issue new guidance with its August 1 2nd-quarter earnings release, Wright said it expects extremities to post sales of $235 million to $240 million next year including “some potential minor, short-term dis-synergies” from the deal with MicroPort. That’s 9.8%-12.1% above the $214 million in revenues generated by the extremities business last year.
“In my experience, companies are bought, not sold, and such was the case in this transaction, as there were several suitors for this very valuable business,” president &CEO Robert Palmisano said in prepared remarks. “Also, very importantly, this will provide our OrthoRecon employees with opportunities for career growth and development. We are grateful to our OrthoRecon employees for their dedication and hard work, and we look forward to working with MicroPort to ensure a seamless transfer and the continued success of the OrthoRecon business as part of MicroPort.”
MicroPort plans to leave the OrthoRecon business in Arlington, under current president Ted Davis, rebranded as MicroPort Orthopedic, according to the release.
WMGI shares rose sharply at the news, hitting a 52-week high of $27.47 apiece on the way to $27.20 as of about 9:50 this morning, up 8.8% on the day. MicroPort’s shares closed up 7.6% yesterday in Hong Kong, at $HK6.07 (about 78¢ each).
