Stryker Corporation (NYSE:SYK) disclosed that it struck a definitive deal to buy Physio-Control International, Inc. for $1.28 billion. The company said that the acquired firm will bring in an improved infrastructure and expand its presence at the global level. The acquisition would be completed before the second quarter ends. The company expects the transaction to be accretive modestly in its earnings for the year 2016.
Stryker has revised its adjusted earnings outlook for the year 2016 to reflect its acquisition of Physio-Control. As a result, the company expects its adjusted earnings to be about $5.57 a share representing an estimated uptick of 8.8 – 12.7% including unfavorable foreign exchange impact. The company said that for the next year, it sees the acquisition of Physio-Control, and Sage to drag earnings of 15 – 18 cents a share as a result of the postponement of its share buyback program. Originally, the company added the share repurchase as a favorable impact for the year 2016.
The target company delivered revenue of $503 million in the fiscal year 2015 representing 6% uptick on a constant currency basis from the preceding year. Its portfolio was highly supplementary to the company’s Medical Emergency Medical Services’ offering. Aside from that, it would also fuel balance between disposables and capital. The closing of the deal was subject to anti-trust approvals and customary conditions.
Physio-Control President and CEO, Brian Webster, said that aligning with Stryker was an exciting step towards the development of its team, as well as, customers. He said that Stryker understood its capital equipment and its core market divisions. Webster indicated that it would accelerate the implementation of its tactics based on the success it achieved in alliance with Bain Capital.
Physio-Control has also been credited for adding considerable operational strength. The company has also invested in R&D substantially to accelerate the launch of its next generation product lines. Therefore, the company believes that it was well-placed to witness growth in the future. The company hopes to continue its uptrend under the new ownership of Stryker.