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Medtronic's Mazor Buyout Creates a New Spine Surgery Major

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Medtronic plc MDT has finally completed its September-announced acquisition of Mazor Robotics. A successful integration of Mazor business will strengthen the company’s position in the growing robotic spine surgery space. Per Medtronic, this buyout ranks among the largest orthopedic deals closed in 2018.

Financial Terms of the Transaction

Shareholders of Mazor Robotics will receive $58.50 per American Depository Share or $29.25 per ordinary share in cash for an approximate total of $1.64 billion. The entire value of the transaction was $1.7 billion or $1.3 billion net of Medtronic`s existing stake in Mazor operations and cash acquired. Both companies’ boards have unanimously approved this deal.

Details of the Deal

Medtronic’s acquisition of the Israel-based robotic surgical guidance systems company Mazor Robotics is aligned with its strategic focus on growth in the field of robotics spine surgery.

Mazor Robotics' proprietary core platform technology including the Mazor X Robotic Guidance System and the Renaissance Surgical-Guidance System are transforming spinal surgery from freehand procedures into a more accurate, modern guided procedure. The buyout is expected to combine Medtronic's market-leading spine implants, navigation and intra-operative imaging technology with the acquired company's robotic-assisted surgery (RAS) systems.

 

 

With this takeover, Medtronic expects to offer a fully-integrated procedural solution for surgical planning, execution and confirmation. The company is also likely to further utilize Mazor Robotics' legacy of innovation in surgical robotics with the company’s site and team based in Israel.

Market Potential in Spine Space

Per a Mordor Intelligence report, the global market for Spinal Surgery Devices is estimated to reach worth $16.6 billion by 2021 at a 5% CAGR from 2016 onward.  Taking such abundant prospects into account, we believe, the company’s latest development is a strategic fit.

Share Price Performance

Over the past three months, shares of Medtronic have outperformed its industry. The stock has lost 5.6%, narrower than the industry’s 13.6% decline. 

Zacks Rank & Key Picks

Medtronic currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical space are Integer Holdings Corporation ITGR, Surmodics, Inc. SRDX and Veeva Systems VEEV.

Integer Holdings has an earnings growth rate of 31.2% for the first quarter of 2019 and a Zacks Rank #2 (Buy).

Surmodics’ long-term earnings growth rate is projected at 10%. The stock presently carries a Zacks Rank of 2.

Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Veeva Systems Inc. (VEEV) : Free Stock Analysis Report
 
Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
 
Medtronic PLC (MDT) : Free Stock Analysis Report
 
Surmodics, Inc. (SRDX) : Free Stock Analysis Report
 
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