NuVasive CEO’s Departure Opens Door to Takeover Offers: Real M&A
2015-04-08 10:00:00.3 GMT
(For a Real M&A column news alert: SALT REALMNA <GO>.)
By Brooke Sutherland
(Bloomberg) -- NuVasive Inc. may be one step closer to a
takeover.
The $2 billion company’s chief executive officer, Alex
Lukianov, is stepping down amid compliance issues related to
expenses and personnel. His more than 15-year tenure started
when the maker of spinal devices was just a venture-backed
startup. Lukianov had talked about growing sales at NuVasive to
$1 billion -- something analysts didn’t see happening for at
least a few years -- and was perceived as not likely to sell in
the meantime, said Michael Matson of Needham & Co.
“He kind of viewed it as his baby,” Matson said in a
phone interview. “I don’t think he would have said that he
would never sell it, but I don’t think he was ready. With just a
lot of M&A happening, this will draw the attention of potential
acquirers.”
Stryker Corp. may be interested in buying NuVasive to shore
up its position as a top-tier provider of medical devices for
spinal surgery, Matson of Needham said. A bid in the range of
$50 to $55 a share, at least an 18 percent premium to NuVasive’s
closing price Tuesday, is probably an appropriate starting
point, said Jeffrey Johnson, an analyst at Robert W. Baird & Co.
A merger with its $2.4 billion peer Globus Medical Inc. would
give both companies more scale and negotiating power with
hospitals.
Stacy Roughan, a spokeswoman for NuVasive, said the company
doesn’t comment on speculation, adding that “all of us at
NuVasive are excited by the opportunities that lie ahead and are
committed to building on our record of growth and value
creation.”
Representatives for Stryker and Globus didn’t respond to
requests for comment.
Industry Consolidation
Adding further fuel to the prospect of M&A is the
dealmaking past of NuVasive’s interim CEO, Greg Lucier. He was
at the helm of Life Technologies Corp. when it agreed to be
taken over by Thermo Fisher Scientific Inc. in 2013.
There have already been more than $90 billion in
pharmaceutical, biotechnology and health-care product takeovers
announced so far in 2015. Last year brought record volume of
more than $300 billion, including Medtronic Plc’s offer to buy
Covidien Plc for more than $40 billion. Zimmer Holdings Inc.
also agreed last year to purchase Biomet Inc. for about $13
billion.
“The orthopedic landscape is one that continues to be ripe
for consolidation,” Richard Newitter, a New York-based analyst
at Leerink Partners, said in a phone interview. “Spine in
particular falls into that category. NuVasive is the largest
amongst the smaller players and could offer a potential way for
a mid-sized player to get some scale.”
Selling Points
NuVasive is one of the leaders in minimally invasive spine
surgery devices, a faster-growing segment of the market, and
it’s a relative bargain. The company’s enterprise value of $2
billion is about 2.6 times its revenue in the past 12 months,
according to data compiled by Bloomberg. That’s a lower multiple
than all but two of almost two dozen U.S. medical device makers
with market values of more than $1 billion.
Its operating margin is below the median for peers, so a
larger company taking it over could cut out a lot of excess
costs and reap the benefits of the savings.
“There’s a lot that would be attractive about NuVasive
from a takeover standpoint,” Johnson of Baird said in a phone
interview. “That’s what investors are talking about.”
Stryker said last May that it had been evaluating a
takeover of London-based Smith & Nephew Plc to expand its share
of the hip- and knee-replacement market. Stryker decided against
making an offer at the time.
New Leadership
The six-month waiting period under U.K. takeover laws has
since expired but a deal may be tougher to pull off now from a
regulatory standpoint because the rest of the market has already
begun consolidating. NuVasive could be an appealing alternative.
Zimmer and Medtronic could also be interested in a takeover
of NuVasive, though Zimmer is still trying to close its purchase
of Biomet and Medtronic is digesting Covidien, Matson of Needham
said.
There are reasons for NuVasive to attract takeover
interest, Leerink’s Newitter said. And now, with the leadership
change, there may be a perception that “you have someone who’s
in who might give it a fresh look and consideration should a bid
come along,” he said.
For Related News and Information:
Pharma’s Comeback Deals Keep Drug M&A on Track to Reach Records
Stryker Buyback Plan Damps Speculation of Smith & Nephew Deal
Wright Medical Takeover Prospects Enhanced After Mako: Real M&A
Bloomberg Intelligence, medical devices: BI MDEV <GO>
Top deal news: DTOP <GO>
Real M&A columns: NI REALMNA <GO>
--With assistance from Cristin Flanagan in New York.
To contact the reporter on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman
2015-04-08 10:00:00.3 GMT
(For a Real M&A column news alert: SALT REALMNA <GO>.)
By Brooke Sutherland
(Bloomberg) -- NuVasive Inc. may be one step closer to a
takeover.
The $2 billion company’s chief executive officer, Alex
Lukianov, is stepping down amid compliance issues related to
expenses and personnel. His more than 15-year tenure started
when the maker of spinal devices was just a venture-backed
startup. Lukianov had talked about growing sales at NuVasive to
$1 billion -- something analysts didn’t see happening for at
least a few years -- and was perceived as not likely to sell in
the meantime, said Michael Matson of Needham & Co.
“He kind of viewed it as his baby,” Matson said in a
phone interview. “I don’t think he would have said that he
would never sell it, but I don’t think he was ready. With just a
lot of M&A happening, this will draw the attention of potential
acquirers.”
Stryker Corp. may be interested in buying NuVasive to shore
up its position as a top-tier provider of medical devices for
spinal surgery, Matson of Needham said. A bid in the range of
$50 to $55 a share, at least an 18 percent premium to NuVasive’s
closing price Tuesday, is probably an appropriate starting
point, said Jeffrey Johnson, an analyst at Robert W. Baird & Co.
A merger with its $2.4 billion peer Globus Medical Inc. would
give both companies more scale and negotiating power with
hospitals.
Stacy Roughan, a spokeswoman for NuVasive, said the company
doesn’t comment on speculation, adding that “all of us at
NuVasive are excited by the opportunities that lie ahead and are
committed to building on our record of growth and value
creation.”
Representatives for Stryker and Globus didn’t respond to
requests for comment.
Industry Consolidation
Adding further fuel to the prospect of M&A is the
dealmaking past of NuVasive’s interim CEO, Greg Lucier. He was
at the helm of Life Technologies Corp. when it agreed to be
taken over by Thermo Fisher Scientific Inc. in 2013.
There have already been more than $90 billion in
pharmaceutical, biotechnology and health-care product takeovers
announced so far in 2015. Last year brought record volume of
more than $300 billion, including Medtronic Plc’s offer to buy
Covidien Plc for more than $40 billion. Zimmer Holdings Inc.
also agreed last year to purchase Biomet Inc. for about $13
billion.
“The orthopedic landscape is one that continues to be ripe
for consolidation,” Richard Newitter, a New York-based analyst
at Leerink Partners, said in a phone interview. “Spine in
particular falls into that category. NuVasive is the largest
amongst the smaller players and could offer a potential way for
a mid-sized player to get some scale.”
Selling Points
NuVasive is one of the leaders in minimally invasive spine
surgery devices, a faster-growing segment of the market, and
it’s a relative bargain. The company’s enterprise value of $2
billion is about 2.6 times its revenue in the past 12 months,
according to data compiled by Bloomberg. That’s a lower multiple
than all but two of almost two dozen U.S. medical device makers
with market values of more than $1 billion.
Its operating margin is below the median for peers, so a
larger company taking it over could cut out a lot of excess
costs and reap the benefits of the savings.
“There’s a lot that would be attractive about NuVasive
from a takeover standpoint,” Johnson of Baird said in a phone
interview. “That’s what investors are talking about.”
Stryker said last May that it had been evaluating a
takeover of London-based Smith & Nephew Plc to expand its share
of the hip- and knee-replacement market. Stryker decided against
making an offer at the time.
New Leadership
The six-month waiting period under U.K. takeover laws has
since expired but a deal may be tougher to pull off now from a
regulatory standpoint because the rest of the market has already
begun consolidating. NuVasive could be an appealing alternative.
Zimmer and Medtronic could also be interested in a takeover
of NuVasive, though Zimmer is still trying to close its purchase
of Biomet and Medtronic is digesting Covidien, Matson of Needham
said.
There are reasons for NuVasive to attract takeover
interest, Leerink’s Newitter said. And now, with the leadership
change, there may be a perception that “you have someone who’s
in who might give it a fresh look and consideration should a bid
come along,” he said.
For Related News and Information:
Pharma’s Comeback Deals Keep Drug M&A on Track to Reach Records
Stryker Buyback Plan Damps Speculation of Smith & Nephew Deal
Wright Medical Takeover Prospects Enhanced After Mako: Real M&A
Bloomberg Intelligence, medical devices: BI MDEV <GO>
Top deal news: DTOP <GO>
Real M&A columns: NI REALMNA <GO>
--With assistance from Cristin Flanagan in New York.
To contact the reporter on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman