Symmetry Medical Inc. (NYSE:SMA), a leading global source of innovative medical device solutions, including surgical instruments, orthopedic implants, and sterilization cases and trays, announced today that it has entered into a definitive asset purchase agreement (the "Agreement") to acquire the surgical instruments business of Codman & Shurtleff, Inc. ("Codman"), a Johnson & Johnson company. Codman's line of surgical instruments will be integrated with Symmetry's current hospital direct business, Specialty Surgical Instrumentation ("SSi"), creating a new business segment with more than $100 million in combined annual sales in the $1 billion worldwide market for general surgical instruments. The combined hospital direct general surgical instruments business will be re-named Symmetry Surgical and will be based in Nashville, TN.
Under terms of the Agreement, Symmetry will acquire the surgical instruments product portfolio and associated assets of Codman for $165 million in cash. Codman will provide transitional services to Symmetry Surgical for a period of time following the close of the transaction, including serving as master distributor outside the U.S. and providing certain administrative support. Symmetry intends to finance the acquisition through an amendment to its Senior Secured Credit Facility and the issuance of $65 million of senior subordinated notes. The transaction will be structured as an asset purchase resulting in significant future tax benefits related to the acquisition of assets. The transaction is expected to close by the end of 2011, subject to customary closing conditions and any necessary governmental approvals.
The transaction includes Codman's reusable stainless steel and titanium surgical hand-held instruments and retractor systems, sterile disposable surgical products (vein strippers, SECTO dissectors, tonsil sponges and surgical marker pens), and sterilization containers. These products are typically used in the surgical specialties of spine, general/OB-GYN, microsurgery/neurosurgery, orthopedics, laparoscopy, cardiovascular, thoracic and general surgery.
Thomas J. Sullivan, President and Chief Executive Officer of Symmetry Medical, said, "The acquisition of Codman's surgical instruments business is a major milestone that provides significant benefits for all areas of our business. Its brands are very well respected by clinicians and hospital customers throughout the world and fit well with Symmetry's reputation for quality and customer service."
"The acquisition achieves several strategic objectives for Symmetry, including diversification of our revenue base with higher margin, intellectual property-backed products that generate strong cash flow. The acquired assets include a strategic capability in instrument procurement and add scale and a robust international presence to our hospital direct business. When combined with SSi as Symmetry Surgical, they will allow us to expand our global geographic footprint with products that are complementary to our core OEM supplier business. We believe the additional presence in demanding surgical specialty procedures and relationships with key surgeon developers will enhance Symmetry's ability to bring innovative, value-add new products to the market for the benefit of both our OEM and hospital customers," added Mr. Sullivan.
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