(SYK) Stryker Wraps Up Memometal Buy

Orthopedic devices giant Stryker Corp (SYK) has completed the acquisition of France-based privately-held extremity devices maker Memometal Technologies S.A. for $150 million in cash. The deal, which was announced on June 6, 2011, also involves an additional payment of $12 million contingent upon meeting specific milestones.

Memometal makes products for extremity indications with annual sales of roughly $30 million. The entity is strengthening its foothold in the rapidly growing global extremity devices market with a broad range of foot, ankle, hand and wrist implant products.

The acquisition boosts Stryker’s exposure in the extremities market and reinforces its position as a major player in the fast-growing foot and hand segments of this market. The transaction is expected to be neutral to the company’s adjusted earnings per share for 2011.

Stryker is expanding its product portfolio by acquiring complementary businesses leveraging a solid balance sheet. The company recently wrapped up its acquisition of Pennsylvania-based orthobiologic and biosurgery products maker Orthovita for $316 million in cash. The acquisition strengthened its competitive position across spine, orthopedics and biosurgery markets.

Earlier, Stryker bought Boston Scientific’s (BSX) Neurovascular assets in January 2011 for $1.5 billion. Prior to that, the company acquired privately-held medical products maker Gaymar Industries which boosted its acute-care product offerings.

We believe that Stryker is well placed for growth driven by new product launches, acquisitions and an improving hospital capital spending backdrop. However, the company remains exposed to stiff competition and pricing/volume pressure on its hip, knee and spine products. Our long-term Neutral recommendation on Stryker is backed by a short-term Zacks #3 Rank (Hold).

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