There are speculations that Transenterix Inc (NYSEMKTS:TRXC) could be a buyout target for companies Johnson & Johnson (NYSE:JNJ) and Opko Health Inc. (NYSE:OPK). The two companies have been trying to expand their markets in the medical devices sector. Transenterix is a maker of robotic surgical system SurgiBot, which is expected to be launched in the U.S. in the second quarter.
The reason Johnson & Johnson is linked to a potential Transenterix buyout is that it recently hinted at plans to restructure its medical device unit. Johnson & Johnson’s medical device unit is struggling to cope with shrinking sales amid growing competition. Revenue growth in the division has been flat for quite some time and it is believed an acquisition of this nature could help bring strength back to the business.
Among the various assets that Johnson & Johnson could target to bolster its medical device business, Transenterix appears to stand out prominently. There are a number of factors that could picque Johnson & Johnson’s interest in Transenterix. Transenterix has an attractive surgery technology for hospitals, and the company’s market cap of just $276 million also makes it an affordable acquisition for them.
Partnership with Alphabet
Acquiring Transenterix could also help Johnson & Johnson attain the most out of its partnership with Alphabet Inc (NASDAQ:GOOG). Johnson & Johnson and Google are collaborating to develop robotic surgery systems, which is an area that Transenterix has already made huge strides in. Transenterix’s SurgiBot System is expected to launch in the U.S. in the coming quarter and the company also has another surgery equipment project in the pipeline.
Opko Health has also been linked to a possible Transenterix acquisition. The speculation appears to hinge on the fact that Opko’s CEO, Philip Frost, already owns a substantial equity stake in Transenterix. Frost owns about 4% of the stake in the company. Given Frost’s appetite for deal-making and the fact that Opko Health is also seeking growth through acquisition, there seems to be logical reason to believe Transenterix might interest him.