Are Wright Medical Shareholders Getting Enough in the Stryker Acquisition?

Health and Healthcare

Published: November 4, 2019 10:20 am

Last Updated: January 30, 2020 1:38 pm

Wright Medical Group N.V. (NASDAQ: WMGI) shares exploded on Monday after the announcement that the firm would be acquired by Stryker Corp. (NYSE: SYK). The boards of directors of both Stryker and Wright have approved the transaction, and it is expected to close in the second half of 2020.

Under the terms of the agreement, Stryker will commence a tender offer for all outstanding ordinary shares of Wright for $30.75 per share, in cash. The deal has a total enterprise value of roughly $5.4 billion and a total equity value of about $4.7 billion.

The offer of $30.75 per share in cash represents a premium of 52% over the volume-weighted average closing price of Wright ordinary shares over the thirty calendar days ended October 31, 2019, the last trading day prior to speculation that Wright was exploring a sale of the company.

Wright brings a highly complementary product portfolio and customer base to Stryker’s trauma and extremities business. With global sales near $1 billion, Wright is a recognized leader in the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, which are among the fastest-growing segments in orthopaedics.

Robert Palmisano, president and CEO of Wright, commented:

We believe this transaction will provide truly unique opportunities and will create significant value for our shareholders, customers and employees. By merging our complementary strengths and collective resources, we will be able to advance our broad platform of extremities and biologics technologies with one of the world’s leading medical technology companies that shares our vision of delivering breakthrough and innovative solutions to improve patient outcomes. In addition, our employees will be afforded the opportunity to be part of one of the world’s best workplaces with greater depth of resources for sustained success in our industry. We look forward to working with Stryker to complete the transaction. Our board of directors believes this acquisition is in the best interests of our shareholders, employees and other stakeholders and has unanimously voted to recommend that Wright shareholders vote in favor of it.

Shares of Wright Medical traded up about 30% Monday morning to $28.53. The 52-week range is $19.04 to $32.86, and the consensus price target is $28.38.

Stryker traded down 4% at $204.30a share, in a 52-week range of $144.75 to $223.45.