Stryker expands ambulance services with Physio-Control buy

Industry:    2016-02-17

Medical device maker Stryker Corp said it would buy Physio-Control International Inc for $1.28 billion in cash to expand its emergency medical services business and raised its full-year earnings forecast for the second time this month. Stryker has been on the look out for deals. The company earlier this month inked a deal with medical supplies maker Sage Products LLC for $2.78 billion and said it had the capacity and the capital for more deals. The company would be a bit more active in terms of deals this year, Stryker Chief Executive Kevin Lobo said on a call with analysts on Tuesday. Redmond, Washington-based Physio-Control, a unit of Bain Capital Private Equity, makes devices such as defibrillators for emergency treatment of cardiac arrests. Sudden cardiac arrest is one of the leading causes of death worldwide. The condition accounts for over 300,000 deaths in the United States annually, Stryker said. Physio-Control was a unit of heart device maker Medtronic Plc since 1998, but was spun-off in 2006. Five years later, Bain Capital acquired Physio-Control, which had fiscal 2015 sales of $503 million. Stryker raised its full-year adjusted earnings forecast to $5.57-$5.77 per share from the $5.55-$5.75 range it estimated when it bought Sage Products. The company also said it expects the acquisition of Physio-Control and Sage Products to add about 15-18 cents per share to earnings in 2017. The Physio-Control deal would also boost Stryker’s emergency medical systems business in European countries including North Ireland, Sweden and Denmark. Emergency medical services, also known as ambulance services, provides out-of-hospital acute medical care and medical transport to patients who are unable to reach the hospitals due to sudden illness and injuries. Citi and Jefferies LLC advised Stryker for the Physio-Control deal while Skadden, Arps, Slate, Meagher & Flom LLP was its legal counsel. Kirkland & Ellis LLP was the legal counsel to Bain Capital. Stryker’s shares were up 0.52 percent at $97.79 on the New York Stock Exchange on Tuesday.

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