News Feature | February 17, 2016

Stryker Continues Acquisition Binge, Pays $1.28B For Physio-Control

Jof Enriquez

By Jof Enriquez,
Follow me on Twitter @jofenriq

Stryker

Stryker Corporation continued its recent acquisition spree, following up its purchase of hospital supplies provider Sage Products with another $ 1 billion+ transaction. This time, it bulked up its Emergency Medical Services (EMS) business by paying Bain Capital Private Equity for nearly $1.3 billion for Physio-Control, a maker of automated external defibrillators (AED), cardiopulmonary resuscitation (CPR) devices, and related accessories and disposables. The all-cash transaction is expected to close at the start of the second quarter.

“Physio-Control has achieved global leadership positions with a strong brand and customer-centered solutions that can predict or intervene in life-threatening emergencies,” Stryker CEO Kevin A. Lobo said in a statement. “Physio-Control’s focused strategy and their culture will fit well within the EMS business of our Medical division, further leveraging our existing call pattern. We look forward to welcoming the Physio-Control team to Stryker.”

Physio-Control manufactures the LIFEPAK line of monitors and defibrillators, the LUCAS chest compression system, the LIFENET System cloud-based data management tools, and a line of automated external defibrillators (AEDs) for lay responders. Physio-Control reported sales for fiscal 2015 of $503 million.

“Joining Stryker is an exciting next step in the evolution of Physio-Control for both our team and our customers,” Physio-Control CEO Brian Webster said in the statement. “Stryker has a deep understanding of capital equipment and of our core market segments. We will build on the success our team has achieved in partnership with Bain Capital, and further accelerate the execution of our strategy, including continued investment in great product solutions for our customers.”

Medtronic owned Physio-Control until 2011, when it sold the company to Bain for $487 million. Stryker said it would buy Physio-Control for $1.28 billion in cash to expand its EMS business and raised its full-year earnings forecast for the second time this month, according to Reuters. Stryker said it expects the recent acquisitions of Physio-Control and Sage Products to add about 15 to 18 cents per share to earnings in 2017.

Stryker earlier this month acquired Sage for $2.78 billion to gain a portfolio of products that combat hospital-acquired infections, including specialty surgical kits and patient hygiene supplies. Around the time of the announcement, amid persistent reports of a takeover of fellow device maker Smith & Nephew, Lobo hinted at more M&A deals in the offing.

“One of the reasons to postpone the share repurchase program was to make sure we still have capacity, so this will not be the last deal that we do,” Lobo told analysts during a call, according to a previous report from Reuters.

Stryker also bought Synergetics’ neurosurgical portfolio this month for an undisclosed amount. Before the transaction, Synergetics was one of Stryker’s original equipment manufacturer (OEM) partners for electrosurgical generators and disposable neurosurgical tools.