- Stryker Friday said it extended the offering period of its cash tender for the outstanding shares of Wright Medical. It is the fourth extension since the company announced the $4 billion acquisition of Wright in November.
- Since then, the proposed deal has faced scrutiny from regulators, with the Federal Trade Commission in January issuing a second request for information on the transaction. The regulator typically makes such a demand in a small fraction of transactions subject to review under U.S. antitrust law.
- More recently, the U.K. Competition and Markets Authority took a look at the merger, then suggested in July that Stryker's proposed divestiture of its Scandinavian Total Ankle Replacement (STAR) product line could clear the country's regulatory hurdles.
Stryker appears committed to the deal, which will boost its position in the fast-growing trauma and extremities markets. CEO Kevin Lobo late last month said plans were progressing, saying on an earnings call that the company still expected to close the transaction around the end of the third quarter or beginning of the fourth quarter. When first announced, Stryker had projected the deal would close in the second half of 2020.
Wright Medical's shares were trading around $30.18 at midday on Friday, just below the deal price of $30.75, suggesting the market believes the transaction is going through.
Jefferies analyst Raj Denhoy told MedTech Dive the tender offer extension is not uncommon in a concentrated industry like medtech, and with antitrust approvals still outstanding. "This extension is perfunctory and is not an indication of deal trouble," he said.
Lobo said the company was proceeding with integration efforts toward completing the acquisition of Wright and had taken advantage of historically low interest rates to obtain additional funding of $2.3 billion for the deal. Further, Stryker expects to complete all needed financing for the transaction with another $1 billion in the third quarter.
In another encouraging sign, the U.K.'s CMA last month said there were "reasonable grounds for believing that the undertakings offered by Stryker, or a modified version of them, might be accepted by the CMA." The agency on June 30 raised concerns the acquisition would give Stryker control of 90% of Britain's ankle replacement market, potentially leading to higher prices and less choice for hospitals and patients. Its change of heart came after Stryker reportedly proposed the STAR product divestiture.
The FTC appears to still be considering the deal. The U.S. regulator could launch an administrative challenge or seek an injunction to stop the acquisition if it identifies anti-competitive concerns.
Stryker has also had to contend with a class action lawsuit led by a Wright Medical shareholder alleging Wright failed to disclose certain material information about the deal and implicating Stryker because it had "direct supervisory control" over the solicitation statement. Stryker called the allegations without merit.
According to Stryker's news release Friday, the tender offer is being extended until Sept. 30. As of Aug. 27, more than 13.6 million Wright Medical ordinary shares, representing 10.5% of the shares outstanding, have been validly tendered. Another 0.6% of the outstanding shares have been tendered pursuant to guaranteed delivery procedures.