Wright Medical And Tornier Merge In A $3.3B Tax Inversion

By Jof Enriquez,
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U.S.-based Wright Medical Group and Netherlands-based Tornier have entered into an all-stock inversion deal worth $3.3 billion that will create a new company focusing on three high-growth areas in orthopedics.

The merger, expected to be completed by the first half of 2015, will create a “pure-play Extremities-Biologics business” to be called Wright Medical Group NV, which will target the “three fastest growing areas of orthopaedics – Upper Extremities, Lower Extremities and Biologics,” the medical device companies said in a statement.

“This combination will create the premier Extremities-Biologics company with a broad global reach,” Robert Palmisano, president and CEO of Wright, said in the statement. “Together, we will have one of the most comprehensive upper and lower extremity product portfolios in the market, extending our leadership position and further accelerating our growth opportunities and path to profitability, all of which we believe will generate long-term value for our shareholders.”

Wright’s shareholders will own 52 percent of the new company, while Tornier’s shareholders will own the remaining 48 percent, according to the Wall Street Journal. Palmisano will become president and CEO of the combined company, while Tornier’s current CEO David Mowry will become executive VP and chief operating officer.

Wright makes bone implants, orthopedic surgical tools, and biologics for tissue healing, while Tornier manufactures joint implants for the hand, wrist, elbow, shoulder, foot, and ankle.

“Once combined, the new company will offer the most comprehensive and innovative portfolio covering Arthroplasty, Bone Fixation, Soft Tissue Repair, and Biologics for Upper and Lower Extremities,” a regulatory filing by Tornier said. “This strong portfolio, leveraged across our dedicated sales channel and supported by our customer service teams will enhance our ability to provide solutions that enable clinicians to alleviate pain and restore their patients’ lifestyles.”

The deal comes more than a month after the U.S. Treasury Department tightened rules to make tax inversions more difficult. In a conference call, both companies said the near-term tax savings from the deal would be minimal, according to the WSJ. Wright is the third company to announce an inversion since the new rules were implemented on September 22, according to a Bloomberg report.

The new company will be incorporated and headquartered in the Netherlands, where Tornier has been headquartered for the last eight years. Wright’s current headquarters in Memphis, TN, will become the new company’s U.S. headquarters.

In a separate announcement on the same day, Wright said it received an Approval Letter from the the U.S. Food and Drug Administration (FDA) for its Premarket Approval Application (PMA) for its Augment Bone Graft as an alternative to autograft in ankle and/or hindfoot fusion procedures, a market worth approximately $300 million annually in the U.S.