After beginning its strategic and equity investment in Mazor two years ago, Medtronic has begun the process of fully acquiring the spinal robotics company.
Here are six things to know:
1. Medtronic will acquire all outstanding ordinary shares of the company for $58.50 per share in cash. The complete transaction is expected to total $1.64 billion, or $1.34 billion net of Medtronic's existing stake in Mazor and cash acquired.
2. Both companies boards have approved the transaction. Medtronic expects the transaction to strengthen its position in the spine market, and plans to offer a fully integrated procedural solution for surgical planning, execution and confirmation.
"Medtronic is committed to accelerating the adoption of robotic-assisted surgery and transforming spine care through procedural solutions that integrate implants, biologics and enabling technologies," said Geoff Martha, executive vice president and president of the Restorative Therapies group at Medtronic.
3. Medtronic first partnered with Mazor in May 2016 on a multi-phased strategic and equity investment. The companies strengthened their partnership in August 2017 when Medtronic became the exclusive worldwide distributor of Mazor X, which has more than 80 installations since launch. Post-acquisition, Medtronic aims to advance and accelerate adoption of robotic-assisted surgery in spine.
4. The transaction is expected to close during the third quarter of Medtronic's fiscal year, which concludes on Jan. 25, 2019. The acquisition is subject to customary closing conditions, including regulatory clearance and Mazor shareholder approval.
5. Medtronic expects the transaction to be modestly dilutive to the company's fiscal 2019 adjusted earnings per share. However, Medtronic projects the acquisition will generate a double-digit return on invested capital by year four and increasing contributions thereafter.
6. Perella Weinberg Partners and Goldman Sachs & Co., were the financial advisors to Medtronic and Meitar Liquornik Geva Leshem Tal and Ropes & Gray were the legal advisors. Mazor's financial team included J.P. Morgan Securities and Duff & Phelps. Kirkland & Ellis and Luchtenstein Levy Wiseman Law were legal advisors.
"The Mazor team and product portfolio's full integration into Medtronic will maximize our impact globally through Medtronic's channels, advance our systems' leadership position in the marketplace and drive the realization of our vision to heal through innovation," said Ori Hadomi, Mazor Robotics' CEO.