Stryker has agreed to pay almost $2.8 billion in cash to Madison Dearborn Partners for Sage Products, aiming for growth of disposable products targeted at reducing “never events,” primarily in intensive care and medical-surgical hospital settings.
The deal is expected to close in the second quarter of this year. The transaction includes an anticipated future tax benefit exceeding $500 million, Stryker says.
Sage develops, manufactures and distributes a range of products, covering oral care, skin preparation and protection, patient cleaning and hygiene, turning and positioning devices and heel care boots.
Sage, headquartered in Cary, Ill., had sales of $430 million in 2015, representing 13 percent organic growth over the prior year, says Lawrence Biegelsen, a senior analyst with Wells Fargo Securities.
“We see the deal as somewhat expensive, but think the strategic rationale makes sense and fits within Stryker’s M&A strategy. Ultimately, we think that the purchase price is justifiable if Sage can maintain double-digit growth as part of Stryker,” he adds. — Jonathon Shacat