Symmetry Medical Inc. (NYSE:SMA), a leading global source of innovative medical device solutions, including surgical instruments, orthopedic implants and sterilization cases and trays, announced today that it has entered a definitive agreement to sell its OEM Solutions business to Tecomet and concurrently transfer to Symmetry Medical, Inc.’s shareholders ownership in a new company holding its Symmetry Surgical business.
Tecomet, which is owned by Genstar Capital, is a contract manufacturing, engineering and metal fabrication technology company based in Wilmington, Mass.
Under terms of the agreement, Symmetry Medical will transfer its Symmetry Surgical business to its shareholders, immediately followed by the acquisition of the remaining OEM Solutions business by Tecomet for $450 million in cash, or $7.50 per share after fees and elimination of outstanding debt. Symmetry Surgical will become a newly traded public company, with Symmetry Medical shareholders of record receiving one share in the public company for every four shares of Symmetry Medical stock.
Thomas J. Sullivan, president and chief executive officer of Symmetry Medical, stated, “We are excited to reach this agreement with Tecomet, which will recognize the value of the OEM Solutions business and enhance the growth potential of Symmetry Surgical. It also provides liquidity for our shareholders along with the upside potential of Symmetry Surgical as a well-positioned, standalone company focused on the large global market for surgical instruments.”
The company provided the following strategic rationale for the deal:
- Recent transactions imply a risk of consolidation in OEM Solutions competitive market, increasing the need for Symmetry Medical to explore acquisitions – both in Orthopedic implants and adjacent medical device categories – to maintain a leadership position.
- OEM Solutions customer consolidation could result in customer conflicts with Symmetry Surgical as a re-usable general surgical instrument company
- Increasing interest in orthopedics and recent activity in the contract manufacturing sector.
- The OEM Solutions business would no longer be at a competitive disadvantage due to the fact that Symmetry Medical is the only public, substantially orthopedic OEM supplier in an industry with high customer concentration.
- Symmetry Surgical would be able to pursue a broader surgical instrument market to optimize our sales channels and cost structure without the financial limitations associated with our current capital structure or potential conflicts with OEM customers.
- The performance of the new independent public company will no longer be impacted by the volatility associated with capital spending by OEM customers.
- A tax efficient spin-off will not create a tax liability at the corporate level.
Mr. Sullivan added, “The proposed transaction has significant benefits for Symmetry Medical’s OEM Solutions customers and Symmetry Surgical customers. The merger with Tecomet will create an OEM business that can provide better service based on broader and more comprehensive capabilities. As a standalone company, Symmetry Surgical will be uniquely attentive to the needs of its customers across the breadth of the surgical instrument market with a distinct clinical and health economic focus without the distraction of implant or other more regulatory demanding product lines.”
The Boards of Directors of both Symmetry Medical and Tecomet have approved the transaction. Symmetry Medical anticipates that the transaction will be in the form of a transfer to Symmetry Medical’s shareholders of publicly traded stock in the new standalone Symmetry Surgical business that will not result in any corporate level tax to Symmetry Medical. Symmetry Medical currently expects that the transaction will be completed by the end of 2014.
Completion of the transaction is subject to certain conditions, including, among others, receipt of regulatory approvals, registration and listing of Symmetry Surgical’s common stock, and final approval by the Company’s shareholders.
There can be no assurance regarding the ultimate timing of the proposed transaction or that the transaction will be completed. Symmetry Medical does not intend to provide regular updates on its progress regarding this transaction, but will announce completion of the transaction and will make such other disclosures as required by applicable law.
Source: Symmetry Medical Inc., Inside INdiana Business