Globus Medical Announces the Acquisition of Alphatec’s International Business

Wednesday, July 27, 2016

Globus Medical, Inc., a leading musculoskeletal implant manufacturer, today announced that it has entered into an agreement to acquire the international operations and distribution channels of Alphatec Holdings, Inc., a publicly traded medical devices company (Nasdaq:ATEC) for $80.0 million in cash, subject to certain closing adjustments. Globus Medical also agreed to extend a 5-year senior secured credit facility of up to $30.0 million to Alphatec to support their working capital needs. The parties expect the closing of the acquisition to occur by October 2016 following satisfaction of the applicable closing conditions.

As a result of the acquisition, Globus Medical will assume Alphatec’s existing international direct and distributor sales channels, which generated sales of approximately $71 million in 2015 and $15.6 million in the first quarter of 2016. Globus Medical intends to offer its own products through these sales channels, but during the transition, Globus Medical will continue to sell Alphatec products. The timing of the transition in each country will depend upon regulatory requirements and contractual or tender commitments. The transaction includes a supply agreement through which Alphatec will supply its products to Globus Medical for up to five years.

David Paul, Chairman and CEO said, “Strategically, this acquisition gives us immediate access to Japan and increased presence and penetration in other key geographies, and significant scale, roughly doubling our international sales. In addition, we will be acquiring a talent pool of international sales professionals as well as an extensive network of international distributors. We expect the impact to be marginally accretive in 2017 as we work through our transition and integration plans and to provide up to 8 cents per share in incremental non-GAAP diluted earnings per share (EPS) in 2018 and beyond.”

For the fourth quarter of 2016, Globus Medical expects this acquisition to add roughly $10 million of additional sales and to be earnings neutral, excluding acquisition related costs, adjusted for tax, which are expected to be roughly $0.02 per share. Globus Medical anticipates incurring significant expenses associated with integrating and optimizing this business in 2017. For 2017, Globus Medical expects the acquisition to add roughly $40 million of sales and contribute non-GAAP EPS of approximately $0.03-$0.05.

Globus Medical will discuss this transaction during its previously announced quarterly earnings conference call scheduled to be held today.

 

Source : globusmedical.com

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