Medical device manufacturer Stryker Corp. has agreed to buy Illinois-based peer Sage Products LLC from private equity firm Madison Dearborn Partners for $2.78 billion, the companies said Monday, in a move that bolsters Stryker’s ability to offer prevention-based treatments and services.
The all-cash deal sees Stryker picking up a company in Sage Products that makes and distributes disposable products for a range of medical needs, including oral care, skin preparation and protection, and patient cleaning and hygiene, among others. The company’s focus is on products that prevent and treat hospital-acquired conditions. Last year, Sage posted sales of $430 million, a 13 percent increase from the prior year.
Kevin A. Lobo, chairman and CEO of Stryker, praised the deal in a statement on Monday, noting that Sage Products’ top-notch leadership team and product pipeline have “driven consistent double-digit sales growth.”
"This acquisition aligns with Stryker's focus on offering products and services that support a mindset of prevention, specifically in the area of ‘Never Events’ such as hospital acquired infections,” he said.
“Today, through our medical division, Stryker offers products that are complementary to those produced by Sage,” Lobo added. “Sage has a 45-year history of focus on patients and caregivers that is evident in their culture and fits well with our medical division.”
Scott Brown, president and CEO of Sage Products, echoed Lobo’s sentiments in a statement of his own.
"With Madison Dearborn's support, our business has grown domestically and we have achieved significant initial success with our international expansion,” he said. “We are grateful for Madison Dearborn's partnership over the past few years and believe that Sage is well-positioned for continued achievement and long-term success with Stryker, a company that understands our business, supports our goals and embraces our values."
The deal, which is still subject to customary closing conditions, is expected to close in the second quarter of this year. Stryker anticipates the acquisition being accretive to its 2016 adjusted net earnings per diluted share, minus acquisition, integration-related and intangible amortization charges.
Madison Dearborn’s sale of Sage Products comes after a little more than three years of ownership. The private equity firm acquired the company in November 2012 in a deal for which no financials were disclosed.
JP Morgan Securities LLC served as Stryker’s exclusive financial adviser and a Sullivan & Cromwell LLP team featuring Keith A. Pagnani, Scott B. Crofton, Davis J. Wang and Steven L. Holley served as outside legal counsel for Stryker.
Barclays is serving as Sage’s financial adviser and Kirkland & Ellis LLP and Madden Jiganti Moore & Sinars LLP are serving as legal counsel for Sage. A Kirkland team led by corporate partners Sanford Perl, Mark Fennell and Matthew Mauney and featuring tax lawyers Bill Welke, Rachel Cantor and Josh McLane is representing Madison Dearborn.
A representative for Madison Dearborn did not immediately respond to a request for comment on Monday.
--Editing by Rebecca Flanagan.
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