KALAMAZOO — Medical device manufacturer Stryker Corp. will bolster its capabilities in medical imaging with the acquisition of an Ontario-based firm.
In a statement this morning, Kalamazoo-based Stryker (NYSE: SYK) said it had reached a definitive agreement to acquire all the issued and outstanding shares in Mississauga-based NOVADAQ Technologies Inc. (Nasdaq: NVDQ, TSX: NDQ) for $11.75 per share, or $701 million. That’s nearly a 96-percent premium based on NOVADAQ’s share price at the close of Friday’s trading, which was $6.
Stryker’s net purchase price for the company will be $654 million, accounting for $47 million in net cash, according to a statement.
Founded in 2000, NOVADAQ is a developer of fluorescence imaging technology that helps surgeons visualize blood flow in blood vessels and tissues. The technology is used in cardiac, cardiovascular, gastrointestinal, plastic, microsurgical and reconstructive procedures.
“NOVADAQ’s unique innovative technology complements Stryker’s advanced imaging portfolio and expands our product offerings into open and plastic reconstructive surgery,” stated Stryker MedSurg and NeuroTechnology group President Timothy Scannell. “NOVADAQ’s innovative technology can reduce post-procedure complication rates and the cost of care for a broad variety of surgical treatments.”
The deal is subject to closing conditions, including approval by NOVADAQ shareholders at an special meeting on Aug. 4, the Ontario Superior Court of Justice and U.S. regulators.
In the deal, NOVADAQ also agreed to a non-solicitation covenant and to pay Stryker a $21 million termination fee under certain circumstances.
Stryker expects the transaction to close at the end of the third quarter. The deal is expected to be dilutive to Stryker’s 2017 net earnings by 3 cents to 5 cents per diluted share, neutral in 2018 and accretive in following years.
In the deal, Stryker was represented by Covington & Burling LLP and Osler, Hoskin & Harcourt LLP, according to a statement. Piper Jaffray & Co. served as the lead financial adviser for NOVADAQ, which was also advised by Perella Weinberg Partners LP. NOVADAQ’s legal advisers were Stikeman Elliott LLP and Dechert LLP.
Shares of NOVADAQ rose sharply this morning in heavy trading. As this report was published, its shares were trading at $11.65. Styker’s shares were up less than 1 percent.