Wright Medical Dealing With FTC, FDA Scrutiny

By Jof Enriquez,
Follow me on Twitter @jofenriq

Wright Medical Group recently received a request for more information from the U.S. Federal Trade Commission (FTC) regarding the company's planned merger with Tornier. The request means that the closing of the deal may be delayed beyond the first half of 2015.

In a press release, Wright Medical disclosed that it recently received an FTC Request for Additional Information and Documentary Material — otherwise known as a "Second Request" — over its proposed $3.3-billion merger with Netherlands-based Tornier. The request extends the waiting period for the deal in accordance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, until both parties comply with the request. The parties may also extend the waiting period voluntarily. The FTC can terminate the waiting period sooner as it deems necessary.

"We just received the Second Request and are evaluating our options," Robert Palmisano, president and CEO, Wright Medical, said. "We will continue to work cooperatively with the FTC to resolve this as quickly as possible. Whatever the final resolution, we do not expect it to have a material impact on the strategic rationale or economics of the proposed merger, and we remain firmly committed to the transaction."

The company said in the press release that, in line with original estimates, the deal may be completed sometime during the second quarter of 2015, but admitted that the timing is now a "best-case scenario."

Late last year, the company voluntarily withdrew and refiled its Hart-Scott-Rodino notification and report form to give the FTC more time to review the deal. The second request from the FTC gives the agency additional time to review the details of the transaction.

Wright Medical did not disclose what specific information regulators were seeking in the second request. The company did say that the product lines identified in request were lower extremity products.

Regulators are closely scrutinizing tax inversion deals such as the Wright Medical-Tornier merger since new tax rules were introduced.

Under the proposed merger agreement first announced in October, U.S.-based Wright Medical will become incorporated and headquartered in the Netherlands, where Tornier is currently based. The combined company, to be called Wright Medical Group NV, will be a “pure-play extremities-biologics business” that will target the three fastest growing areas of orthopaedics — upper extremities, lower extremities, and biologics — the company said previously, according to a Med Device Online story.

In addition to announcing the receipt of a second request from the FTC, Wright also stated in the press release that one of its vendors received a Form 483 following completion of a recent FDA pre-approval inspection of a facility where Augment Bone Graft is manufactured. The vendor has reportedly sent a response form to address the Form 483 which listed "several observations." Wright Medical said that final approval for Augment Bone Graft may be delayed but still expected to be granted sometime in the first half of 2015.