December 1998 Bulletin

More consolidation of orthopaedic device firms

Another megamerger involving orthopaedic device manufacturers was announced in November when Medtronic, Inc. said it reached an agreement to acquire Sofamor Danek Group, Inc. in a stock swap deal valued at $3.7 billion.

The announcement came three days before Johnson & Johnson said that it's previously announced acquisition of DuPuy, Inc., had been completed in a $3.5 billion deal.

Medtronic, based in Minneapolis, is the world's largest cardiac device manufacturer. Primary products include those for bradycardia pacing, tachyarrhythmia management, atrial fibrillation management, heart failure management, coronary and peripheral vascular disease and heart valve replacement.

Sofamor Danek Group, based in Memphis, is primarily involved in developing, manufacturing and marketing devices, instruments, computer-assisted visualization products and biomaterials used in the treatment of spinal and cranial disorders.

E.R. Pickard, Sofamor Danek chairman and chief executive said, "by combining the technology, service and energy of the two companies, we will be able to develop new and better solutions more quickly and deliver these solutions to doctors and their patients faster, more cost effectively."

Earlier, in comments about factors that may affect future operating results and financial condition, Sofamor Danek noted that the medical device industry is characterized by rapidly changing technology and frequent product introductions. The company also said the medical device industry is subject to intense competition. The market for products designed to treat spinal conditions is highly competitive and the competition is expected to increase.

In July, Johnson & Johnson announced it would acquire DuPuy for $35 a share or $3.5 billion. DuPuy was merged with Johnson & Johnson's current orthopaedic business under the DuPuy name. Earlier, DuPuy acquired Acromed Corp., another orthopaedic medical device manufacturer.

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