Stryker To Buy Medical Products Supplier Sage Products For $2.78 Bln

(RTTNews) - Medical devices company Stryker Corp. (SYK) said Monday that it has agreed to acquire medical products supplier Sage Products LLC from private equity firm Madison Dearborn Partners for $2.78 billion in cash. Stryker also raised its earnings outlook for fiscal 2016.

Kalamazoo, Michigan-based Stryker noted that the transaction to acquire Sage Products includes an anticipated future tax benefit that is expected to exceed $500 million and positively impact cash flows for about 15 years. The transaction is expected to close in the second quarter of 2016.

Founded in 1971 and based in Cary, Illinois, Sage makes and distributes disposable products targeted at reducing "Never Events," primarily in the intensive care unit and MedSurg hospital unit setting. Sage's products include solutions for oral care, skin preparation and protection, patient cleaning and hygiene, turning and positioning devices and heel care boots.

Sage sales for fiscal 2015 totaled $430 million, up 13 percent over the prior year.

Kevin Lobo, Chairman and CEO of Stryker said, "This acquisition aligns with Stryker's focus on offering products and services that support a mindset of prevention, specifically in the area of "Never Events" such as hospital acquired infections. Today, through our Medical division, Stryker offers products that are complementary to those produced by Sage."

Stryker expects the transaction to be accretive to its 2016 adjusted net earnings per diluted share excluding acquisition, integration-related and intangible amortization charges and also continue to be accretive thereafter.

Accordingly for fiscal 2016, the company raised its outlook for adjusted earnings per share by $0.05 to a range of $5.55 to $5.75 per share from the prior range of $5.50 to $5.70 per share.

On average, thirty one analysts polled by Thomson Reuters expect the company to report earnings of $5.59 per share for the year. Analysts' estimates typically exclude special items.

J.P. Morgan Securities LLC served as Stryker's exclusive financial advisor, while Sullivan & Cromwell LLP served as outside legal counsel for Stryker in connection with this transaction.

For Sage, Barclays is serving as financial advisor, while Kirkland & Ellis LLP and Madden, Jiganti, Moore & Sinars LLP are serving as its legal counsel in connection with this transaction.

SYK is trading at $97.70, down $1.45 or 1.46 percent on a volume of 872,375 shares.