Smith & Nephew has signed up to acquire Integra LifeSciences’ orthopedics business focused on the growing upper and lower extremity markets.
The $240 million cash deal would not only add product portfolios covering shoulder replacements as well as reconstructions of the hand, wrist, elbow, ankle and foot, it would also bring in a dedicated sales force and distributors spanning the U.S., Canada and Europe.
The acquisition would also give Smith & Nephew access to Integra’s next-generation shoulder replacement system, currently under development and slated for a 2022 commercial launch.
“This strategic acquisition represents a significant opportunity to strengthen Smith & Nephew’s position in a high-value area and allows us to offer a leading extremities portfolio to customers,” said Skip Kiil, president of global orthopedics at Smith & Nephew, which has pegged the growth of the U.S. extremities market at about 6% to 7% per year.
About 300 employees are expected to make the jump from Integra, whose business operates out of Lyon, France, and Austin, Texas, which is also home to the company’s surgeon training facility. The division brought in $90 million in annual revenue in both 2019 and 2018, but about $32.7 million for the first half of this year.
Sales did take a hit due to the COVID-19 pandemic and the postponement of elective procedures, with the division’s revenue down 48.6% in 2020’s second quarter compared to the same period the year before.
Still, Smith & Nephew said it expects the business to deliver double-digit revenue growth in 2021 and 2022, and to complement its current orthopedic offerings in hip, knee and shoulder reconstruction.
Meanwhile, on Integra’s side, the divestiture will allow the company to focus on its products in neurosurgery, surgical instrumentation and regenerative medicine, said President and CEO Peter Arduini.
“Smith+Nephew’s strong focus in orthopedics will enable the business to expand its reach and scale, while allowing the team to thrive in a new environment,” Arduini said. The acquisition is expected to close near the end of 2020.