News Feature | September 19, 2014

Medtronic Sells Instrument Lines To Integra LifeSciences For $60M

By Jof Enriquez,
Follow me on Twitter @jofenriq

Medtronic is selling its MicroFrance and Xomed manual ENT (ear, nose, and throat) and laparoscopy instrumentation lines to Integra LifeSciences for $60 million in cash in a deal that is expected to close by the final quarter of this year.

Integra will get approximately 4,000 instruments from both brands, as well as a facility in France that supports the products, according to a press release.

"This announcement reflects Integra's continuing commitment to building our Instruments business. The transaction provides access to R&D, service & repair and other infrastructure already in place in St. Aubin le Monial, France, which will improve our ability to service our current portfolio and to develop new products," Debbie Leonetti, Integra's CVP, president, U.S. Instruments, said in the press release. "These products also align nicely with our current sales channels as well as adjacent divisions, particularly our Neurosurgery business."  

The MicroFrance business generated sales of $30 million in the most recent annual reporting period, approximately two-thirds of which came from non-U.S. markets. The acquisition will boost Integra’s presence in international markets, the company said. In the press release, Integra said that it anticipates the transaction to add $27 million to $30 million in revenue and about 10 cents of adjusted EPS in 2015.

According to the Minneapolis / St. Paul Business Journal, the instruments line was “part of Medtronic’s surgical technologies business unit, which generated about $1.6 billion in revenue during the company’s 2014 fiscal year.”

“Our ENT division is increasingly focusing on novel therapies and innovative powered surgical, navigation and nerve monitoring technologies,” Medtronic spokeswoman Cindy Resman explained to the Minneapolis Star Tribune. “As such, manual instrumentation is no longer a part of our longer-term strategy.”

Analyst Jason Lau of Decision Resources Group told the Star Tribune that the deal reflects Medtronic’s ongoing tactic to prioritize fast-moving, higher-growth areas such as balloon sinuplasty surgical instruments. “Medtronic is smart. They like playing in high-growth markets, and they seem interested in expanding their ENT profile,” he said.

Medtronic is in the process of acquiring Covidien, a company that also makes surgical tools, although Covidien’s portfolio does not overlap with the ENT line of tools from MicroFrance.