Medtronic, an Irish medical device company, has announced its plans to acquire Israel’s Mazor Robotics in a deal worth $1.64 billion. The all-cash deal values Mazor’s shares at $58.50 per American Depository Share ($29.25 per ordinary share).
Since Medtronic already owns a stake in the robotic guidance systems developer, the deal totals a net of $1.34 billion. The merger is a natural fit for both companies as Medtronic’s spine implants and imaging technology pair well with Mazor’s surgical guidance tools.
The Mazor X Robotic Guidance System and the Renaissance Surgical-Guidance System were attractive technologies to Medtronic which seek to replace traditional, freehand spinal surgery with robotic, guided technology. By offering the spinal implant itself, along with the computer-guided tools to complete the procedure, Medtronic and Mazor hope their solution will take surgeons from planning and execution all the way through to follow-up and confirmation of the procedure’s success.
“We believe robotic-assisted procedures are the future of spine surgery, and provide surgeons a more precise, repeatable, and controlled ability to perform complex procedures. Medtronic is committed to accelerating the adoption of robotic-assisted surgery and transforming spine care through procedural solutions that integrate implants, biologics and enabling technologies,” said Geoff Martha, executive vice president and president of the Restorative Therapies Group at Medtronic. “The acquisition of Mazor adds robotic-assisted guidance systems to our expanding portfolio of enabling technologies, and we intend to further cultivate Mazor’s legacy of innovation in surgical robotics with the site and team in Israel as a base for future growth.”
Medtronic and Mazor’s partnership was established two years ago in May 2016 when the former invested in the robotics company. Medtronic became the exclusive worldwide distributor of the Mazor X system in August 2017 which led to more widespread adoption of the technology in over 80 surgical suites.
Medtronic’s restorative therapies business – which includes spine and surgical technologies – brought in $7.4 billion in revenue in 2017 which makes up approximately one-quarter of the company’s total earnings.
“Today is a historic day for spine surgery and a defining event in the market’s evolution, and I want to acknowledge and thank all of those whose contribution and faith have been so critical and impactful to our success,” said Ori Hadomi, CEO of Mazor Robotics. “The Mazor team and product portfolio’s full integration into Medtronic will maximize our impact globally through Medtronic’s channels, advance our systems’ leadership position in the marketplace, and drive the realization of our vision to heal through innovation.”
According to Medtronic, the deal with Mazor should be completed in Q1 of 2019. While the company could take a slight hit on the earnings for the year, the deal is expected to produce a return on investment by year four in the double-digits.